sv3za
As filed with the Securities and Exchange
Commission on March 16, 2012.
Registration
No. 333-174933
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Amendment No. 2
to
FORM S-3
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
OPPENHEIMER HOLDINGS
INC.
and the Subsidiary Guarantors listed below
(Exact name of registrant as
specified in its charter)
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Delaware
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98-0080034
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(State or other jurisdiction
of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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125 Broad Street
New York, New York
10004
(212) 668-8000
(Address, including zip code,
and telephone number, including area code, of registrants
principal executive offices)
Dennis P.
McNamara, Esq.
General Counsel
125 Broad Street
New York, New York
10004
(212) 668-8000
(Name, address, including zip
code, and telephone number, including area code, of agent for
service)
Copies to:
Richard B.
Aftanas, Esq.
Skadden, Arps, Slate,
Meagher & Flom LLP
Four Times Square
New York, New York
10036
(212) 735-3000
(212) 735-2000
(facsimile)
Approximate date of commencement of proposed sale to the
public: As soon as practicable after the
effective date of this registration statement.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following
box. o
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest
reinvestment plans, check the following
box. o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
If this Form is a registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that
shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the
following
box. o
If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.D. filed to
register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities
Act, check the following
box. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large accelerated
filer o
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Accelerated
filer þ
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Non-accelerated
filer o
(Do not check if a smaller reporting company)
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Smaller reporting
company o
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The Registrants hereby amend this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrants shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
TABLE OF
ADDITIONAL REGISTRANTS
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State or Other
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Exact Name of Additional
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Jurisdiction of
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I.R.S. Employer
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Registrant as Specified in
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Incorporation or
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Identification
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its Charter*
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Organization
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Number
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E.A. Viner International Co.
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Delaware
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74-0148280
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Viner Finance Inc.
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Delaware
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98-0100459
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Each Additional Registrant is a direct or indirect subsidiary of
Oppenheimer Holdings Inc. The address and telephone number of
the principal executive offices of each of the Additional
Registrants is 125 Broad Street, New York, New York 10004 and
the telephone number is
(212) 668-8000. |
EXPLANATORY
NOTE
This Registration Statement is being filed, and the Prospectus
that is part hereof will be used, solely in connection with
offers and sales by Oppenheimer & Co. Inc. related to
market-making transactions. We will not receive any proceeds of
such sales.
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
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SUBJECT TO COMPLETION, DATED
MARCH 16, 2012
PROSPECTUS
OPPENHEIMER
HOLDINGS INC.
$200,000,000 8.75% Senior
Secured Notes due 2018
The notes bear interest at the rate of 8.75% per year. Interest
on the notes is payable on April 15 and October 15 of each year,
beginning on October 15, 2011. The notes mature on
April 15, 2018. We may redeem any of the notes beginning on
April 15, 2014. The initial redemption price for the notes
is 106.563% of their principal amount plus accrued and unpaid
interest and additional interest, if any. In addition, at any
time prior to April 15, 2014, we may redeem some or all of
the notes at a price equal to 100% of the principal amount of
the notes to be redeemed plus a make-whole premium,
plus accrued and unpaid interest and additional interest, if
any. On or prior to April 15, 2014, we may redeem up to 35%
of the principal amount of the notes at a redemption price equal
to 108.75% of the principal amount of the notes, plus accrued
and unpaid interest and additional interest, if any, using the
net cash proceeds from sales of certain types of capital stock.
There is no sinking fund for, or mandatory redemption of, the
notes. If a change of control occurs, we must give holders of
the notes an opportunity to sell us their notes at a purchase
price of 101% of the principal amount of such notes, plus
accrued and unpaid interest and additional interest, if any, to
the date of purchase. In addition, our obligations under the
notes to comply with certain covenants will be suspended and
cease to have any further effect from and after the first date
when the rating of the notes is investment grade.
The notes are our senior obligations. The notes are
unconditionally guaranteed by certain of our existing and
certain of our future domestic subsidiaries. The notes and the
guarantees with respect to the notes are secured by a
first-priority security interest in substantially all of the
assets of the company and the guarantors with certain
exclusions. Most of our subsidiaries, including our broker
dealer subsidiaries and certain of our operating subsidiaries,
which generate substantially all of our revenue and net income
and own substantially all of our assets, are not guarantors of
the notes and certain of our subsidiaries, including our broker
dealer subsidiaries, are not subject to many of the restrictive
covenants in the indenture governing the notes.
No public market currently exists for the notes. We do not
intend to list the notes on any securities exchange and,
therefore, no active public market for the notes is anticipated
to exist.
See Risk Factors beginning on page 15
for a discussion of certain risks you should consider before
investing in the notes.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
This prospectus is to be used by Oppenheimer & Co.
Inc. in connection with offers and sales of the notes in
market-making transactions effected from time to time.
Oppenheimer & Co. Inc. may act as principal or agent
in such transactions. Such sales will be made at prevailing
market prices at the time of sale, at prices related thereto or
at negotiated prices. We will not receive any of the proceeds
from such sales.
The date of this prospectus
is ,
2012.
TABLE OF
CONTENTS
Prospectus
You should rely only on the information contained or
incorporated by reference into this prospectus or any prospectus
supplement to this prospectus filed by us with the Securities
and Exchange Commission, or the SEC. We have not
authorized anyone to provide you with different or additional
information. If anyone provides you with different or
inconsistent information, you should not rely on it. This
document may only be used where it is legal to sell these
securities. You should not assume that the information in this
prospectus, any prospectus supplement to this prospectus, or any
document incorporated by reference is accurate as of any date
other than their respective dates. Our business, financial
condition, results of operations and prospects may have changed
since those dates.
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CAUTIONARY
NOTICE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained in or incorporated by reference in this
prospectus include certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Statements contained in this prospectus or incorporated by
reference that are not historical facts are identified as
forward-looking statements for the purpose of the
safe harbor provided by Section 21E of the Securities and
Exchange Act of 1934, as amended (the Exchange Act),
and Section 27A of the Securities Act of 1933, as amended
(the Securities Act). Forward-looking statements are
subject to uncertainties that could cause actual future events
and results to differ materially from those expressed in the
forward-looking statements. These forward-looking statements are
based on estimates, projections, beliefs, and assumptions that
we believe are reasonable but are not guarantees of future
events and results. Actual future events and our results may
differ materially from those expressed in these forward-looking
statements as a result of a number of important factors. Factors
that could cause actual results to differ materially from those
contemplated in our forward-looking statements include, among
others:
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transaction volume in the securities markets;
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the volatility of the securities markets;
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fluctuations in interest rates;
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changes in regulatory requirements which could affect the cost
and method of doing business and reduce returns;
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fluctuations in currency rates;
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general economic conditions, both domestic and international;
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changes in the rate of inflation and the related impact on the
securities markets;
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competition from existing financial institutions and other
participants in the securities markets;
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legal developments affecting the litigation experience of the
securities industry and us, including developments arising from
the failure of the Auction Rate Securities markets and the
results of pending litigation involving us;
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changes in federal and state tax laws which could affect the
popularity of products sold by us or impose taxes on securities
transactions;
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the effectiveness of efforts to reduce costs and eliminate
overlap;
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war and nuclear confrontation as well as political unrest and
regime changes;
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our ability to achieve our business plan;
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corporate governance issues;
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the impact of the credit crisis and tight credit markets on
business operations;
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the effect of bailout, financial reform and related legislation,
including, without limitation, the Dodd-Frank Act and the
proposed Volcker Rule;
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the consolidation of the banking and financial services industry;
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the effects of the economy on our ability to find and maintain
financing options and liquidity;
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credit, operations, legal and regulatory risks;
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risks related to foreign operations;
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risks related to the downgrade of U.S. long-term sovereign debt
obligations and the sovereign debt of European nations; and
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the factors set forth under Risk Factors in this
prospectus and other factors described in our filings with the
SEC.
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We undertake no obligation to publicly update or review any
forward-looking statements, whether as a result of new
information, future developments or otherwise.
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SUMMARY
This summary highlights selected information contained
elsewhere or incorporated by reference in this prospectus. This
summary may not contain all of the information that you should
consider before buying any of the notes. You should read the
following summary together with the more detailed information
and consolidated financial statements and the notes to those
statements incorporated into this prospectus by reference.
In this prospectus, except as otherwise indicated or as the
content otherwise requires, the terms Company,
we, us, and our refer to
Oppenheimer Holdings Inc. and its consolidated subsidiaries. We
refer to the directly and indirectly owned subsidiaries of
Oppenheimer Holdings Inc. collectively as the Operating
Subsidiaries.
Our
Company
Company
Overview
We are a leading middle-market investment bank and full service
broker-dealer that provides financial services and advice to
high net worth individuals, families, businesses and
institutions. With roots tracing back to 1881 and a storied
brand name, we are engaged in a broad range of activities in the
securities industry, including retail securities brokerage,
institutional sales and trading, investment banking (both
corporate and public finance), research, market making, trust
services, and investment advisory and asset management services.
We own, directly or through subsidiaries,
Oppenheimer & Co. Inc. (Oppenheimer), a
New York-based securities broker-dealer, Oppenheimer Asset
Management (OAM), a New York-based investment
advisor, Freedom Investments Inc. (Freedom), a
discount securities broker-dealer based in New Jersey,
Oppenheimer Trust Company (Oppenheimer Trust),
a New Jersey limited purpose bank, OPY Credit Corp., a New York
corporation, organized to trade and clear syndicated corporate
loans, and Oppenheimer Multifamily Housing &
Healthcare Finance, Inc. (formerly known as Evanston Financial
Corporation) (OMHHF), a Federal Housing
Administration (FHA)-approved mortgage company based
in Pennsylvania. Our international businesses are carried on
through Oppenheimer E.U. Ltd. (United Kingdom), Oppenheimer
Investments Asia Ltd. (Hong Kong), and Oppenheimer Israel (OPCO)
Ltd. (Israel).
For the fiscal year 2011, our revenues and net income
attributable to the shareholders of Oppenheimer Holdings Inc.
were $959.0 million and $10.3 million, respectively,
compared with revenues and net income attributable to the
shareholders of Oppenheimer Holdings Inc. of
$1,036.3 million and $38.5 million, respectively, for
the fiscal year 2010. For the fiscal year 2011, our Consolidated
Adjusted EBITDA and Consolidated Adjusted EBITDA margin were
$54.3 million and 5.7%, respectively, compared with
Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDA
margin of $105.4 million and 10.2%, respectively, for the
fiscal year 2010. For the fiscal year 2011, our client assets
and assets under management were $76.0 billion and
$18.6 billion, respectively, compared with client assets
and assets under management $73.2 billion and
$18.8 billion, respectively, for the fiscal year 2010.
At December 31, 2011, we employed 3,576 employees, of whom
approximately 1,427 were financial advisors. We are
headquartered in New York, New York and incorporated under the
laws of the state of Delaware.
Private
Client
Through its Private Client division, Oppenheimer provides a
comprehensive array of financial services through a network of
approximately 1,427 financial advisors in 94 offices located
throughout the United States and in two offices in Latin America
through locally incorporated and independently owned businesses.
Clients include
high-net-worth
individuals and families, corporate executives, and small and
mid-sized businesses.
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Clients may choose a variety of ways to establish a
relationship and conduct business including brokerage accounts
with transaction-based pricing
and/or with
investment advisory accounts with asset-based fee pricing.
Oppenheimer provides the following private client services:
Full-Service Brokerage, Wealth Planning, Margin Lending and
Securities Lending. The Private Client division generated
revenues of $535.4 million in the fiscal year 2011 and at
December 31, 2011, we held client assets of approximately
$76.0 billion.
Oppenheimer Trust offers a wide variety of trust services to the
clients of Oppenheimer. This includes custody services, advisory
services and specialized servicing options for clients. At
December 31, 2011, Oppenheimer Trust held custodial assets
of approximately $2.3 billion.
Asset
Management
We offer a wide range of investment advisory services to our
retail and institutional clients through proprietary and third
party distribution channels. Clients include
high-net-worth
individuals and families, foundations and endowments, and trust
and pension funds. Asset management capabilities include equity,
fixed income, large-cap balanced and alternative investments,
which are offered through vehicles such as privately managed
accounts, and retail and institutional separate accounts. Our
asset management services include: Separate Managed Accounts,
Uniform Managed Accounts, Other Managed Accounts, Investment
Advisory Services, Discretionary Portfolio Management, Fee-Based
Non-Discretionary Accounts, Institutional Investment Management
and Alternative Investments. The Asset Management division
generated $74.0 million in the fiscal year 2011 and at
December 31, 2011, we had $18.6 billion of client
assets under fee-based management programs.
Capital
Markets
Our Capital Markets division generated revenues of
$349.6 million in the fiscal year 2011.
Investment Banking. Oppenheimer employs over
125 investment banking professionals throughout the United
States, the United Kingdom, Israel and Asia. The investment
banking department provides strategic advisory services and
capital markets products to emerging growth and middle market
businesses. The investment banking business has industry
coverage groups that focus on each of consumer and business
services, energy, financial institutions, healthcare, industrial
growth and services, media and entertainment, technology,
telecom and financial sponsors.
Equities Capital Markets. In our Equities
Capital Markets division we provide institutional sales and
trading in Equities, Options and Derivatives, and Convertible
Bonds, offering a wide range of trading products and strategies,
market making and access to global capital markets for a diverse
set of domestic and international investors. Oppenheimer
provides listed block trades, NASDAQ market making, bulletin
board trading, capital markets/origination, risk arbitrage,
statistical arbitrage, special situations, pair trades, relative
value, and portfolio and electronic trading. In addition,
Oppenheimer offers a suite of quantitative and algorithmic
trading solutions as well as access to liquidity in order to
access the global markets. Oppenheimer also has a dedicated team
for Event Driven Sales and Trading. Oppenheimers Equity
Research group employs over 37 senior analysts covering over 600
equity securities worldwide, and over 70 dedicated equity
research sales professionals. In addition to providing regular
research pieces, Oppenheimer sponsors numerous conferences,
connecting investors and the management of covered companies.
Debt Capital Markets. In our Debt Capital
Markets division, we provide institutional sales and trading in
Fixed Income, High Yield and Securitized products. Since June
2009, Oppenheimer has participated in auctions for
U.S. Government securities conducted by the Federal Reserve
Bank of New York. We also provide Fixed Income Research and
operate a Public Finance department that advises and raises
capital for state and local governments. Through OPY Credit
Corp., we participate in loan syndications and operate as
underwriting agent in leveraged financing transactions as well
as trade syndicated corporate loans in the secondary market.
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Oppenheimer
Multifamily Housing & Healthcare Finance,
Inc.
OMHHF is a leading company in the FHA-insured mortgage industry,
providing origination, underwriting, closing and servicing on
commercial mortgage loans throughout the United States, focusing
on the multifamily, affordable housing and healthcare industries
using FHA programs. These programs provide certain categories of
loans with a government guarantee prior to becoming securities
and being sold off to investors. OMHHF, through Oppenheimer,
immediately hedges its principal risk with a broad set of
counterparties until the loans have been securitized. OMHHF also
maintains a mortgage servicing portfolio in which it collects
mortgage payments from mortgagees and passes these payments on
to mortgage holders, charging a fee for its services. The
Company owns 67.3% of OMHHF and the remaining 33.7% is owned by
two non-controlling interest holders.
Credit
Strengths
Strong
Track Record of Paying Down Debt
We have consistently paid down our debt, reducing our long-term
indebtedness related to a 2003 acquisition by
$202.5 million, from $225.0 million in 2003 to
$22.5 million in 2010. We also significantly deleveraged
through the credit crisis even as we were integrating a major
acquisition, reducing our Debt to Last-Twelve-Months
(LTM) Consolidated Adjusted EBITDA leverage ratio
from 3.0x at the end of 2008 to 1.2x at the end of 2010 prior to
the offering of the notes in April 2011. Our LTM Consolidated
Adjusted EBITDA leverage ratio was 3.6x at the end of 2011.
Robust
Performance Across a Challenging Cycle
Despite the financial crisis of 2008 and its impact on the
broader financial services sector, from the fiscal year 2005 to
2011, we grew revenue by 41% from $679.7 million to
$959.0 million, we grew assets under management by 81% from
$10.3 billion to $18.6 billion, and we grew book value
per share from $24.46 to $37.55.
Revenue for 2010 and Consolidated Adjusted EBITDA for 2008 to
2010 have been revised. For further information see note 2
Revision to financial statements in Item 8
Financial Statements and Supplementary Data in our annual report
on
form 10-K
for the year ended December 31, 2011 which is incorporated
by reference into this prospectus.
Primarily
an Agency Business Model
Our business strategy is built on an agency model. We derive our
revenues mainly by charging our clients commissions and fees on
transactions we execute and assets we manage on their behalf. We
take little principal risk, and when we do so, it is generally
in order to facilitate our client facing business. In addition,
we are not a bank holding company, therefore our operations will
not be impacted by the limits on principal risk adopted in the
recently enacted legislation aimed at financial institutions.
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Strong
Strategic Position
Our business model combines the full service capabilities of our
larger competitors while maintaining the flexibility and
independence of a boutique investment firm. We are one of the
few full service firms that continues to consistently service
middle market companies across the United States and
internationally. We have a long-standing history in the private
client business dating back to 1881 and have a focus on the
attractive segment of clients with assets of $3 million to
$15 million. We have a strong reputation in equity research
and have an attractive niche position in middle-market banking
and financial sponsor sectors. Oppenheimer is a leading market
maker, making markets in over 600 stocks, with access to all
international trading markets. Our full service boutique model
positions us to compete for a broad range of business as the
broader financial markets recover and retail and capital markets
activity returns. Our independent and entrepreneurial culture is
an advantage in recruiting financial advisors and other
financial professionals. Our size allows us to adapt quickly in
the changing market place and seek an attractive risk-adjusted
return on capital, while being able to provide a full service
offering. The loss of corporate independence by some of our
competitors has improved our competitive position within middle
market financial services and benefits our platforms for
experienced financial advisors.
Diversified
and Synergistic Business Model
We generate profits across three differentiated business
segments. Our Private Client division earns revenues based on
transaction volumes and assets under administration, our Asset
Management division earns revenue based on assets under
management and our Capital Markets division earns revenues based
on transaction and trading volumes. The different drivers of
revenues for the three divisions provides us with a diversified
revenue stream. The Capital Markets division benefits from
leads, distribution capabilities and brand recognition from the
Private Client division, while providing additional
opportunities for the Private Client division. The Asset
Management division provides opportunities for us to monetize
further fee streams from our Private Client division while
providing more stable non-transactional revenues. Oppenheimer
serves clients from 94 offices located in major cities and local
communities in the United States, which limits our reliance on
any one regional economy and provides clients with local high
quality service with the benefits of a national full service
business.
Proven
Track Record of Profitable Growth with Attractive Future
Prospects
We have a successful track-record of executing on both our
organic and acquisition strategies. We have grown our revenues
from $283.3 million in 2002 to $959.0 million in 2011,
or 238.5%, organically and through acquisitions, including the
2003 acquisition of the U.S. Private Client and Asset
Management Divisions of CIBC World Markets Corp. Our client
assets under administration grew from $17.8 billion in 2002
to $76.0 billion in 2011, or 327.0%. Assuming the economy
continues to recover, we are well positioned to benefit from the
recovery of the broader financial services industry. We believe
rebounding markets will likely increase trading activity by
retail investors driving transactional revenues and increase
asset values, which drive asset management fees. Increases in
interest rates are expected to have a significant positive
impact on the margin lending business and fees earned on cash
products. We believe our Capital Markets division will also
benefit from increasing
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activity in the financing and mergers and acquisitions markets.
In addition, those financial services firms that survived the
financial crisis will benefit from the greater stability and
credibility provided by the recent regulatory reforms. We
believe our strategic initiatives across our business segments,
such as our application to become a New York Federal Reserve
Primary Dealer and our investment in OMHHF, will provide new
opportunities for growth. In addition we believe we have the
business platform and meet the regulatory requirements to
benefit from growth in international markets, particularly in
Asia.
Well
Recognized Brand
We have an internationally recognized brand name. Our history
dates back to 1881, successfully navigating two World Wars and
numerous financial crises. We are in the top eight
U.S. full service securities brokerage firms by the number
of financial advisors and are able to leverage our name
recognition across all our divisions to generate new client
business. Our Private Client division supports our middle market
banking efforts, while our well recognized equity research
increases awareness across private client, capital markets and
asset management clients.
Experienced
Management Team
We have a strong and experienced senior management team with
extensive securities industry experience and significant tenure
of working together. Our top twelve senior managers have, on
average, more than 13 years of experience at Oppenheimer
and, on average, more than 24 years of overall industry
experience.
Conservative
Risk Position and Robust Risk Management Culture
We believe we maintain a conservative risk position with an
average value at risk, or VaR, for the fiscal year 2011 of
$1.2 million and a year end VaR of $754 thousand. Our
assets consist primarily of cash and assets which can be readily
converted into cash, to give us a strong liquidity position if
it becomes necessary. We also have significant additional
liquidity available through short-term funding sources such as
bank loans, stock loans and repurchase agreements. We believe we
have a robust risk management culture with a focus on managing
market risk, credit risk, liquidity risk and operational risk.
We have risk management policies and procedures overseen by our
risk management committee, which is made up of many of our most
senior officers. Oppenheimer seeks to manage its assets and the
maturity profile of its obligations in order to be able to
liquidate its assets prior to its obligations coming due, even
in times of severe market dislocation. We seek to accomplish
this by a strict balance sheet and regulatory capital management
and staying focused on our core business. Oppenheimer had
$144.4 million in Regulatory Net Capital (pursuant to
Rule 15c3-1
of the Securities and Exchange Act) and $121.8 million of
Regulatory Excess Net Capital as of December 31, 2011.
Our
Strategy
We have a number of strategic efforts in place to increase
revenue and profitability in our Private Client, Asset
Management and Capital Markets divisions. We continue to execute
on our near-term strategies of new business and product
development, streamlining our infrastructure, and investing in
our technology. In the longer term, we plan to grow our business
both organically and with opportunistic acquisitions within our
areas of expertise, including branch acquisitions. We also see
significant opportunities to expand our international operations
in our Private Client and Capital Markets divisions.
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Private Client. We intend to increase average
production per financial advisor by leveraging the existing
product platform through a greater percentage of our sales
force, marketing and cross-selling our product offerings among
our branch locations and enhancing our financial advisor
technology. We will expand our sales force incrementally through
efforts to recruit and retain top talent. We manage our
recruitment costs and retention payments relative to competitors
by taking advantage of our distinct culture and our favorable
reputation with financial advisors frustrated with the large
wire houses. We also intend to develop more products and
services which target high net worth clients to attract new
clients and leverage our existing relationships to increase our
share of customer spending on financial
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services. We believe our earnings from this segment of our
business will improve significantly in a higher interest rate
environment.
|
|
|
|
|
|
Asset Management. Our clients have access to a
team of specialists with expertise across many disciplines, from
hedge funds to mutual funds, from domestic investments to
offshore opportunities. We integrate traditional and
non-traditional portfolios into a unified solution while
offering ready access to the best managers in the investment
management universe, both within and outside the firm. We intend
to deepen and broaden our product offerings and penetration in
asset management. One of our strategic advantages is our
diligence process for identifying new asset managers and asset
management strategies. Our diligence analysts are directly
available for clients, which differentiates us from our
competitors when working with high net worth individuals and
family offices. We are also looking at additional opportunities
to bring successful hedge fund and private equity investments to
our clients. In addition, we are expanding our sales and
marketing team in asset management in an effort to increase
growth in client assets through new clients and increasing share
of managed assets from existing clients.
|
|
|
|
Capital Markets. We intend to utilize our
strong brand name to continue to develop our investment banking
and research capabilities. Our institutional equities business
is looking to grow through expansion of market share with
existing clients by efficiently allocating resources across
different products to focus on key targeted small to medium
capitalization corporate clients. The increased penetration of
institutional accounts will allow us to leverage our
distribution capabilities. In investment banking, we intend to
utilize our Private Client division for leads and continue to
grow our middle-market banking and financial sponsor franchises,
including our leveraged finance business. Longer term, we seek
to increase our business footprint and reputation by hiring
experienced bankers with diverse product and industry knowledge.
In the taxable fixed income sector, we continue to expand our
product line and selectively grow our recently established
middle markets desk. We have also applied to be designated as a
Primary Dealer with the U.S. Federal Reserve Bank of New
York, which would give us access to bid directly in
U.S. Treasury security auctions and provide new client
service opportunities as more parties will be able to trade with
us.
|
6
SUMMARY
DESCRIPTION OF THE NOTES
The following is a brief summary of some of the terms of this
offering. For a more complete description of the terms of the
notes, see Description of the notes included
elsewhere in this prospectus.
|
|
|
Issuer |
|
Oppenheimer Holdings Inc. |
|
Securities |
|
Up to $200.0 million aggregate principal amount of
8.75% Senior Secured Notes due 2018. |
|
Maturity |
|
April 15, 2018. |
|
Interest |
|
8.75% per annum, payable semi-annually in arrears on April 15
and October 15 of each year, beginning on October 15, 2011. |
|
Subsidiary Guarantors |
|
All payments on the notes, including principal and interest, are
jointly and severally and fully and unconditionally guaranteed
on a senior secured basis by E.A. Viner International Co. and
Viner Finance Inc. and future subsidiaries required to guarantee
the notes pursuant to the Future Subsidiary
Guarantees covenant (the Subsidiary
Guarantors). See Description of the
notes Covenants Future subsidiary
guarantees. |
|
Collateral |
|
The notes and the subsidiary guarantees are secured by a
first-priority security interest in substantially all of the
Companys and the Subsidiary Guarantors existing and
future tangible and intangible assets, subject to certain
exceptions and permitted liens. See Description of the
notes Security. |
|
Optional Redemption |
|
We may redeem the notes at any time on or after April 15,
2014. The redemption price for the notes (expressed as a
percentage of principal amount), will be as follows, plus
accrued and unpaid interest and additional interest, if any, to,
but not including, the redemption date: |
|
|
|
If Redeemed During the 12-Month
|
|
|
Period Commencing April 15,
|
|
Redemption Price
|
|
2014
|
|
106.563%
|
2015
|
|
104.375%
|
2016
|
|
102.188%
|
2017 and thereafter
|
|
100.000%
|
|
|
|
|
|
In addition, at any time prior to April 15, 2014, we may
redeem the notes at our option, in whole at any time or in part
from time to time, at a redemption price equal to 100% of the
principal amount of the notes redeemed plus a
make-whole premium and accrued and unpaid interest
and additional interest, if any. |
|
|
|
In addition, at any time prior to April 15, 2014, we may
redeem up to 35% of the principal amount of the notes with the
net cash proceeds of one or more sales of our capital stock
(other than disqualified stock) at a redemption price of 108.75%
of their principal amount, plus accrued and unpaid interest and
additional interest, if any; provided that at least 65% of the
original aggregate principal amount of notes issued on the
closing date remains outstanding after each such redemption and
notice of any such redemption is mailed within 90 days of
each such sale of capital stock. |
8
|
|
|
Change in Control |
|
Upon a change of control we may be required to make an offer to
purchase the notes. The purchase price will equal 101% of the
principal amount of the notes on the date of purchase, plus
accrued and unpaid interest and additional interest, if any. We
may not have sufficient funds available at the time of a change
of control to make any required debt payment (including
repurchases of the notes). |
|
Ranking |
|
The notes are our general senior obligations and rank
effectively senior in right of payment to all unsecured and
unsubordinated obligations of the Company or the relevant
Subsidiary Guarantor, to the extent of the value of the
collateral owned by the Company or such Subsidiary Guarantor
(and, to the extent of any unsecured remainder after payment of
the value of the collateral, rank equally in right of payment
with such unsecured and unsubordinated indebtedness of the
Company). The notes also rank senior in right of payment to any
subordinated debt of the Company or such Subsidiary Guarantor.
The notes are secured on a first-priority basis by the
collateral, subject to certain exceptions and permitted liens
and it is intended that pari passu lien indebtedness, if any,
will be secured on an equal and ratable basis. The notes are
effectively junior in right of payment to all existing and
future indebtedness, claims of holders of preferred stock and
other liabilities (including trade payables) of subsidiaries of
the Company that are not guarantors, including all Regulated
Subsidiaries (as defined below) and unrestricted subsidiaries. |
|
|
|
|
|
As of December 31, 2011, we had $195 million of senior
debt, $195 million of which was secured, and no
subordinated debt. |
|
|
|
|
|
We currently derive the majority of our revenue from the
operations of our Regulated Subsidiaries. As our obligations
under the notes are not guaranteed by our Regulated
Subsidiaries, creditors of a Regulated Subsidiary, including
trade creditors, customers, and preferred stockholders, if any,
of such Regulated Subsidiary generally have priority with
respect to the assets and earnings of such Regulated Subsidiary
over the claims of the holders. The notes, therefore, are
effectively subordinated to the claims of creditors, including
trade creditors, customers and preferred stockholders, if any,
of our Regulated Subsidiaries. As of December 31, 2011, our
Regulated Subsidiaries had $2.9 billion outstanding in such
liabilities. |
|
|
|
Certain Covenants |
|
The Company agreed to covenants that limit the ability of the
Company and its restricted subsidiaries and, in certain limited
cases, its Regulated Subsidiaries, among other things, to: |
|
|
|
incur additional debt and issue preferred stock;
|
|
|
|
pay dividends, acquire shares of capital stock, make
payments on subordinated debt or make investments;
|
|
|
|
place limitations on distributions from Regulated
Subsidiaries or restricted subsidiaries;
|
|
|
|
issue guarantees;
|
|
|
|
sell or exchange assets;
|
9
|
|
|
|
|
enter into transactions with shareholders and
affiliates;
|
|
|
|
create liens; and
|
|
|
|
effect mergers.
|
|
|
|
These covenants are subject to important exceptions and
qualifications, which are described under the heading
Description of the notes Covenants in
this prospectus. These exceptions and qualifications include,
among other things, a variety of provisions that are intended to
allow us to continue to conduct our brokerage operations in the
ordinary course of business. In addition, if and for so long as
the notes have an investment grade debt rating from both
Standard & Poors, a division of The McGraw-Hill
Companies, Inc. (Standard & Poors)
and Moodys Investors Service, Inc.
(Moodys) and no default has occurred and is
continuing under the indenture, we will not be subject to
certain of the covenants listed above. See Description of
the notes. |
|
|
|
Pursuant to the indenture, the following covenants apply to us
and our restricted subsidiaries, but generally do not apply, or
apply only in part, to our Regulated Subsidiaries: |
|
|
|
limitation on indebtedness and issuances of
preferred stock, which restricts our ability to incur additional
indebtedness or to issue preferred stock;
|
|
|
|
limitations on restricted payments, which generally
restricts our ability to declare certain dividends or
distributions or to make certain investments;
|
|
|
|
limitation on dividend and other payment
restrictions affecting restricted subsidiaries or Regulated
Subsidiaries, which generally prohibits restrictions on the
ability of certain of our subsidiaries to pay dividends or make
other transfers;
|
|
|
|
future Subsidiary Guarantors, which prohibits
certain of our subsidiaries from guaranteeing our indebtedness
or indebtedness of any restricted subsidiary unless the notes
are comparably guaranteed;
|
|
|
|
limitation on transactions with shareholders and
affiliates, which generally requires transactions among our
affiliated entities to be conducted on an arms-length
basis;
|
|
|
|
limitation on liens, which generally prohibits us
and our restricted subsidiaries from granting liens unless the
notes are comparably secured; and
|
|
|
|
limitation on asset sales, which generally prohibits
us and certain of our subsidiaries from selling assets or
certain securities or property of significant subsidiaries.
|
|
|
|
Under certain circumstances, however, the covenants under
Description of the notes Covenants
Limitation on indebtedness and issuances of preferred
stock, Limitation on restricted
payments, Limitation on dividend and
other payment restrictions affecting restricted subsidiaries or
regulated subsidiaries, Future
subsidiary guarantees, Limitation on
transactions |
10
|
|
|
|
|
with shareholders and affiliates, and
Limitation on asset sales may apply to
our Regulated Subsidiaries, depending on the nature of the
transaction in question, whether a Regulated Subsidiary is
incurring any Indebtedness (as defined in the indenture) and a
variety of other factors. |
|
|
|
For purposes of the covenants, Regulated Subsidiaries refers to
any direct or indirect subsidiary of the Company that is
registered as (i) a broker dealer pursuant to
Section 15 of the Exchange Act, (ii) a broker dealer
or underwriter under any foreign securities law or (iii) a
banking or insurance subsidiary regulated under state, federal
or foreign laws. Restricted subsidiaries generally include any
of our subsidiaries that are not Regulated Subsidiaries and that
have not been designated by our board of directors as
unrestricted. |
|
|
|
|
|
As of December 31, 2011, our Regulated Subsidiaries
represented, before intercompany eliminations, 89% of our total
assets. For the year ended December 31, 2011, our Regulated
Subsidiaries represented, before intercompany eliminations, 90%
of our total revenues. |
11
SUMMARY
CONSOLIDATED HISTORICAL FINANCIAL DATA
The summary consolidated historical financial data set forth
below for each of the years ended December 31, 2011, 2010
and 2009 has been primarily derived from our audited
consolidated financial statements. The following data should be
read in conjunction with Managements Discussion and
Analysis of Financial Condition and Results of Operations
and the consolidated historical financial statements and the
related notes contained in our annual report on
Form 10-K
for the year ended December 31, 2011, which is incorporated
by reference into this prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
(Dollars in thousands)
|
|
|
Consolidated Statements of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions
|
|
$
|
492,228
|
|
|
$
|
537,730
|
|
|
$
|
555,574
|
|
Principal transactions, net
|
|
|
47,660
|
|
|
|
78,384
|
|
|
|
106,141
|
|
Interest
|
|
|
56,779
|
|
|
|
45,871
|
|
|
|
35,960
|
|
Investment banking
|
|
|
119,202
|
|
|
|
134,906
|
|
|
|
90,960
|
|
Advisory fees
|
|
|
197,097
|
|
|
|
187,888
|
|
|
|
160,705
|
|
Other
|
|
|
46,026
|
|
|
|
51,494
|
|
|
|
41,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
|
958,992
|
|
|
|
1,036,273
|
|
|
|
990,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and related expenses
|
|
|
626,767
|
|
|
|
676,041
|
|
|
|
668,784
|
|
Clearing and exchange fees
|
|
|
24,991
|
|
|
|
25,754
|
|
|
|
26,748
|
|
Communications and technology
|
|
|
62,673
|
|
|
|
64,700
|
|
|
|
62,873
|
|
Occupancy and equipment costs
|
|
|
76,509
|
|
|
|
74,389
|
|
|
|
74,372
|
|
Interest
|
|
|
38,026
|
|
|
|
25,750
|
|
|
|
21,429
|
|
Other
|
|
|
112,178
|
|
|
|
101,648
|
|
|
|
99,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
941,144
|
|
|
|
968,282
|
|
|
|
953,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) before income taxes
|
|
|
17,848
|
|
|
|
67,991
|
|
|
|
37,067
|
|
Income tax provision (benefit)
|
|
|
5,231
|
|
|
|
27,211
|
|
|
|
16,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Profit (Loss) for the period
|
|
|
12,617
|
|
|
|
40,780
|
|
|
|
20,824
|
|
Less: Net Profit attributable to non-controlling interest, net
of tax
|
|
|
2,301
|
|
|
|
2,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Profit (Loss) attributable to Oppenheimer Holdings Inc.
|
|
$
|
10,316
|
|
|
$
|
38,532
|
|
|
$
|
20,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Profit (Loss) for the period
|
|
|
12,617
|
|
|
|
40,780
|
|
|
|
20,824
|
|
Other Comprehensive Income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustment
|
|
|
(1,737
|
)
|
|
|
1,597
|
|
|
|
(99
|
)
|
Change in cash flow hedges, net of tax
|
|
|
1,322
|
|
|
|
(847
|
)
|
|
|
884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income (Loss) for the period
|
|
$
|
12,202
|
|
|
$
|
41,530
|
|
|
$
|
21,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31,
|
|
|
2011
|
|
2010
|
|
2009
|
|
|
(Dollars in thousands)
|
|
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
70,329
|
|
|
$
|
52,854
|
|
|
$
|
68,918
|
|
Total assets
|
|
|
3,527,439
|
|
|
|
2,515,062
|
|
|
|
2,162,582
|
|
Total liabilities
|
|
|
3,014,036
|
|
|
|
2,007,700
|
|
|
|
1,701,570
|
|
Total equity
|
|
|
508,070
|
|
|
|
504,330
|
|
|
|
461,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Adjusted
|
|
|
|
|
|
|
As of December 31,
|
|
Year Ended December 31,
|
|
|
2011
|
|
2010
|
|
2009
|
|
|
|
|
(Dollars in thousands)
|
|
Other Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Adjusted EBITDA(1)
|
|
|
54,292
|
|
|
|
105,427
|
|
|
|
87,124
|
|
Long-term Debt to Consolidated Adjusted EBITDA
|
|
|
3.6x
|
|
|
|
1.2x
|
|
|
|
1.5x
|
|
|
|
|
(1) |
|
Consolidated Adjusted EBITDA is a measure of operating
performance that is not defined under GAAP. We define
Consolidated Adjusted EBITDA as net profit (loss) attributable
to Oppenheimer Holdings Inc. before interest expense, income
taxes, depreciation expense and amortization expense, adjusted
to exclude share-based compensation expense which is not settled
in cash and other non-cash charges. Our definitions and
calculations of Consolidated Adjusted EBITDA may differ from the
Consolidated Adjusted EBITDA or analogous calculations of other
companies in our industry, and may limit is usefulness as a
comparative measure. |
|
|
|
Consolidated Adjusted EBITDA has limitations as an analytical
tool. Consolidated Adjusted EBITDA is not a measurement of net
income (loss), and should not be considered as an alternative to
net income (loss) as a measure of operating performance. Rather,
Consolidated Adjusted EBITDA should be considered as
supplementary information to our GAAP results, shown here in
order to provide a more complete understanding of our operating
performance. |
|
|
|
We use Consolidated Adjusted EBITDA in a number of ways to
assess our consolidated operating performance, and we believe
this measure is helpful to management and investors in
identifying trends in our operating results. We use Consolidated
Adjusted EBITDA as a measure of our consolidated operating
performance exclusive of income and expenses that relate to the
financing, income taxes and capitalization of the business. We
believe this metric measures our financial performance based on
operational factors that management can impact in the
short-term, namely the cost structure and expenses of the
organization. In addition, Consolidated Adjusted EBITDA as used
in this prospectus corresponds to the definition of
Consolidated EBITDA that will be used in the
indenture related to the notes. |
13
The following table shows the reconciliation of our Consolidated
Adjusted EBITDA from GAAP net profit attributable to Oppenheimer
Holdings Inc.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
|
(Dollars in thousands)
|
|
|
Net Profit Attributable to Oppenheimer Holdings
Inc.:
|
|
$
|
44,577
|
|
|
$
|
75,367
|
|
|
$
|
(19,979
|
)
|
|
$
|
20,824
|
|
|
$
|
38,532
|
|
|
$
|
10,316
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense(a)
|
|
|
8,742
|
|
|
|
8,097
|
|
|
|
15,540
|
|
|
|
13,925
|
|
|
|
11,539
|
|
|
|
17,323
|
|
Income Taxes
|
|
|
35,873
|
|
|
|
52,027
|
|
|
|
(16,587
|
)
|
|
|
16,243
|
|
|
|
25,603
|
|
|
|
3,799
|
|
Depreciation Expense
|
|
|
9,583
|
|
|
|
9,695
|
|
|
|
11,474
|
|
|
|
12,630
|
|
|
|
12,448
|
|
|
|
11,899
|
|
Amortization Expense
|
|
|
12,520
|
|
|
|
9,772
|
|
|
|
8,569
|
|
|
|
7,065
|
|
|
|
5,885
|
|
|
|
6,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated EBITDA
|
|
|
111,295
|
|
|
|
154,957
|
|
|
|
(982
|
)
|
|
|
70,687
|
|
|
|
94,007
|
|
|
|
50,254
|
|
Share-Based Compensation Expense(b)
|
|
|
2,537
|
|
|
|
4,182
|
|
|
|
7,334
|
|
|
|
7,002
|
|
|
|
7,611
|
|
|
|
4,039
|
|
Other Non-Cash Charges(c)
|
|
|
(17,822
|
)
|
|
|
(2,578
|
)
|
|
|
42,747
|
|
|
|
9,435
|
|
|
|
3,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Adjusted EBITDA
|
|
$
|
96,009
|
|
|
$
|
156,562
|
|
|
$
|
49,099
|
|
|
$
|
87,124
|
|
|
$
|
105,427
|
|
|
$
|
54,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Interest expense on long-term debt. |
|
(b) |
|
Charges associated with Employee Share Plan restricted stock
award program and Equity Incentive Plan stock option award
program. |
|
(c) |
|
Includes gains on extinguishment of debt ($4.1 million and
$2.5 million in 2006 and 2007, respectively), gains/losses
related to the exchange of three stock exchange seats for shares
of the NYSE Group, resulting from the merger between NYSE and
Archipelago, ($13.7 million gain and $2.6 million loss
in 2006 and 2008, respectively), and charges related to deferred
compensation and benefit arrangements in conjunction with
acquisitions made in 2003 and 2008 ($5.1 million,
$40.2 million, $9.4 million, and $3.8 million in
2005, 2008, 2009, and 2010, respectively). |
14
RISK
FACTORS
Any investment in the notes involves a high degree of risk.
You should consider carefully the following information about
these risks, together with the other information contained or
incorporated by reference in this prospectus, including risks
contained in our most recent annual report on Form 10-K, any
subsequent quarterly or annual reports on Form 10-Q or Form 10-K
or any current reports on Form 8-K, before buying any of the
notes. If any of the following risks actually occur, our
business, financial condition, prospects, results of operations
or cash flow could be materially and adversely affected.
Additional risks or uncertainties not currently known to us, or
that we currently deem immaterial, may also impair our business
operations. We cannot assure you that any of the events
discussed in the risk factors below will not occur. If any of
such events does occur, you may lose all or part of your
original investment in the notes.
Certain
of Our Subsidiaries, Which Generate Substantially all of Our
Revenues and Own Substantially all of Our Assets, are not
subject to Many of the Restrictive Covenants in the Indenture
Governing the Notes.
Certain of our subsidiaries (which will be defined in the
indenture as the Regulated Subsidiaries) including, among
others, Oppenheimer & Co. Inc., and Freedom
Investments Inc., are generally not subject to the restrictive
covenants in the indenture that place limitations on our
actions, and where they are subject to covenants there are
numerous exceptions and limitations. As of December 31,
2011, our Regulated Subsidiaries represented, before
intercompany eliminations, 89% of our total assets. For the year
ended December 31, 2011, our Regulated Subsidiaries
represented, before intercompany eliminations, 90% of our total
revenues. The indenture does not restrict our Regulated
Subsidiaries from incurring debt, which would be structurally
senior to the notes. Our Regulated Subsidiaries are also not
subject to restrictions relating to making investments and are
generally not subject to the restrictions on the sale of assets.
The incurrence of debt, the sale of assets or the making of
investments, without, or with limited, indenture restrictions,
by our Regulated Subsidiaries may impair our ability to make
payments on principal and interest on the notes.
Our Regulated Subsidiaries are subject to regulation by
U.S. Federal and state regulatory agencies and securities
exchanges and by various
non-U.S. governmental
agencies or regulatory bodies and securities exchanges, each of
which has been charged with the protection of the financial
markets and seek to protect the interests of our broker-dealer
clients. Such regulations may not serve, and you should not rely
on them, to protect your interests as a holder of the notes.
Depending on these circumstances, these regulations may prevent
our Regulated Subsidiaries from paying dividends or other
distributions to us without which we cannot make payments of
interest or principal on the notes.
We
Depend Almost Entirely on the Cash Flow From Our Regulated
Subsidiaries to Meet Our Obligations, and Your Right to Receive
Payment on the Notes Will be Structurally Subordinate to the
Obligations of These Subsidiaries.
Our Regulated Subsidiaries are separate and distinct legal
entities with no obligation to pay any amounts due pursuant to
the notes or to provide us with funds for our payment
obligations. Our cash flow and our ability to service our debt,
including the notes, will depend in part on the earnings of our
Regulated Subsidiaries and on the distribution of earnings,
loans or other payments to us by these subsidiaries. Our
Regulated Subsidiaries represented substantially all of our
revenues in 2011. As of December 31, 2011, our Regulated
Subsidiaries represented substantially all of our assets. In
addition, the ability of our Regulated Subsidiaries to make any
dividend, distribution, loan or other payment to us could be
subject to statutory or contractual restrictions.
Oppenheimer & Co. Inc. and Freedom Investments, Inc.
both require permission from the Financial Industry Regulatory
Authority prior to declaring dividends. Payments to us by these
subsidiaries will also be contingent upon their earnings and
their business considerations. Because we may depend in part on
the cash flow of these subsidiaries to meet our obligations,
these types of restrictions may impair our ability to make
scheduled interest and principal payments on the notes.
15
If the
Company is Unable to Repay its Outstanding Indebtedness When
Due, its Operations May be Materially, Adversely
Affected.
At December 31, 2011, the Company had liabilities of
approximately $3.0 billion, a significant portion of which
is collateralized by highly liquid and marketable government
securities as well as marketable securities owned by customers.
The Company cannot assure that its operations will generate
funds sufficient to repay its existing debt obligations as they
come due. The Companys failure to repay its indebtedness
and make interest payments as required by its debt obligations
could have a material adverse affect on its results of
operations and financial condition, including the acceleration
of the payment of the debt.
We May
not be Able to Generate Sufficient Cash to Service the Notes or
Our Other Indebtedness, and May be Forced to Take Other Actions
to Satisfy Our Obligations Under Our Indebtedness, Which May not
be Successful.
Our ability to make scheduled payments on or to refinance our
debt obligations depends on our financial condition and
operating performance, which is subject to prevailing economic
and competitive conditions and to certain financial, business
and other factors beyond our control. We may not be able to
maintain a level of cash flows from operating activities
sufficient to permit us to pay the principal, premium, if any,
and interest on the notes or our other indebtedness.
If our cash flows and capital resources are insufficient to fund
our debt service obligations, we may be forced to reduce or
delay investments and capital expenditures, or to sell assets,
seek additional capital or restructure or refinance the notes or
our other indebtedness. Our ability to restructure or refinance
our debt will depend on the condition of the capital markets and
our financial condition at such time. Any refinancing of our
debt could be at higher interest rates and may require us to
comply with more onerous covenants, which could further restrict
our business operations. The terms of the indenture governing
the notes and existing or future debt instruments may restrict
us from adopting some of these alternatives. These alternative
measures may not be successful and may not permit us to meet our
scheduled debt service obligations.
Our
Debt Agreements Contain Restrictions that Limit Our Flexibility
in Operating Our Business.
The indenture governing the notes contains various covenants
that limit the ability of the Company and its restricted
subsidiaries and, in certain limited cases, its Regulated
Subsidiaries, among other things, to:
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incur additional indebtedness;
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pay dividends on, repurchase or make distributions in respect of
our capital stock or make other restricted payments;
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make certain investments;
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sell certain assets;
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create liens;
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consolidate, merge, sell or otherwise dispose of all or
substantially all of our assets; and
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enter into certain transactions with our affiliates.
|
As a result of the covenants and restrictions contained in the
indenture, we are limited in how we conduct our business and we
may be unable to raise additional debt or equity financing to
compete effectively or to take advantage of new business
opportunities. The terms of any future indebtedness we may incur
could include more restrictive covenants and may further limit
our ability to enter into certain types of transactions.
We cannot assure you that we will be able to remain in
compliance with these covenants in the future and, if we fail to
do so, that we will be able to obtain waivers from the
appropriate parties
and/or amend
the covenants.
16
The
Value of the Collateral Securing the Notes and the Note
Guarantees May not be Sufficient to Satisfy Our Obligations
Under the Notes and the Note Guarantees.
No appraisal of the value of the collateral has been made in
connection with the offering of the notes, and the fair market
value of the collateral is subject to fluctuations based on
factors that include general economic conditions and similar
factors. The book value of the collateral should not be relied
on as a measure of realizable value for such assets. In
addition, the indenture allows us to incur additional secured
debt, including under certain circumstances secured debt that is
intended to share in the collateral that will secure the notes
and the note guarantees. The amount to be received upon a sale
of the collateral would be dependent on numerous factors,
including the actual fair market value of the collateral at such
time, the timing and the manner of the sale and the availability
of buyers. Portions of the collateral may become illiquid and
may have no readily ascertainable market value. Likewise, we
cannot assure holders of the notes that the collateral will be
saleable or, if saleable, that there will not be substantial
delays in its liquidation. In the event of a foreclosure,
liquidation, bankruptcy or similar proceeding, the value of the
collateral and the amount that may be received upon a sale of
collateral will depend upon many factors including, among
others, the condition of the collateral and our industry, the
ability to sell the collateral in an orderly sale, market and
economic conditions, the availability of buyers and other
factors. In addition, courts could limit recoverability with
respect to the collateral if they deem a portion of the interest
claim usurious in violation of applicable public policy.
Accordingly, in the event of a foreclosure, liquidation,
bankruptcy or similar proceeding, the collateral may not be sold
in a timely or orderly manner, and the proceeds from any sale or
liquidation of the collateral may not be sufficient to satisfy
our obligations under the notes, the note guarantees and any
future debt that is secured by the collateral.
In addition, under the terms of the indenture governing the
notes we are also permitted in the future to incur additional
indebtedness and other obligations that may share in the liens
on the collateral securing the notes. Any additional obligations
secured by a lien on the collateral (whether senior to or equal
with the lien of the notes) will dilute the value of the
collateral.
We cannot assure holders of the notes that the proceeds of any
sale of the collateral following an acceleration of maturity
with respect to the notes would be sufficient to satisfy, or
would not be substantially less than, amounts due on the notes
and the other debt secured thereby. If the proceeds of any sale
of the collateral were not sufficient to repay all amounts due
on the notes, holders of the notes (to the extent their notes
were not repaid from the proceeds of the sale of the collateral)
would have only an unsecured claim against the remaining assets
of the Company and the Subsidiary Guarantors.
To the extent that liens, rights and easements granted to or
obtained by third parties encumber assets located on property
owned by us or constitute subordinate liens on the collateral,
those third parties may have or may exercise rights and remedies
with respect to the property subject to such encumbrances
(including rights to require marshalling of assets) that could
adversely affect the value of such collateral and the ability of
the collateral agent to realize or foreclose on such collateral.
The
Imposition of Certain Permitted Liens Could Adversely Affect the
Value of the Collateral.
The collateral securing the notes is subject to liens permitted
under the terms of the indenture governing the notes, whether
arising prior to or on or after the date the notes are issued.
The existence of any permitted liens could adversely affect the
value of the collateral securing the notes as well as the
ability of the collateral agent to realize or foreclose on such
collateral. The collateral that secures the notes may also
secure future indebtedness and other obligations of the Company
and the Subsidiary Guarantors to the extent permitted by the
indenture and the security documents. Your rights to the
collateral would be diluted by any increase in the indebtedness
secured by this collateral.
There
are Certain Categories of Property that are Excluded From the
Collateral.
Certain categories of assets are excluded from the collateral
securing the notes and the note guarantees. Excluded assets
include certain items of property, including without limitation
items as to which a security interest cannot be granted without
violating contract rights or applicable law, certain equity
interests of our
17
first-tier foreign subsidiaries, capital stock of certain of our
subsidiaries, certain promissory notes or other instruments
payable by certain of our subsidiaries, foreign intellectual
property and assets outside the United States to the extent
a lien on such assets cannot be perfected by the filing of
Uniform Commercial Code financing statements, certain
applications for trademarks or service marks filed in the United
States Patent and Trademark Office, deposit and securities
accounts which consist of certain withheld income taxes,
federal, state or local employment taxes, or amounts required to
be paid over to an employee benefit plan pursuant to applicable
law, all segregated deposit accounts constituting tax accounts,
payroll accounts and trust accounts, cash and cash equivalents
maintained in certain accounts of a Subsidiary Guarantor that is
an investment advisor, deposit and securities accounts, to the
extent the aggregate value of assets therein does not exceed a
certain amount, motor vehicles and other similar assets in which
a lien may be perfected only through compliance with a non-UCC
certificate of title statute, letter of credit rights and
commercial tort claims, equipment leased by us or our
subsidiaries under a lease that does not permit the granting of
a lien on such equipment, any leasehold improvements to the
extent that the grant of security interest therein would violate
the related lease, assets subject to a purchase money lien,
capitalized lease obligation or similar arrangement, in each
case to the extent the agreement governing such lease,
obligation or arrangement prohibits such assets from being used
as collateral, capital stock of or equity interest in any person
other than wholly-owned subsidiaries to the extent not permitted
by the terms of such persons organizational documents, any
property and assets the pledge of which would require
governmental consent, approval, license or authorization,
Excluded Real Property (as defined in Description of the
notes Definitions), proceeds and any products
in the aforementioned (to the extent such proceeds or products
would constitute excluded assets described above), and certain
other items agreed to by the parties and as more fully set forth
in the security documents. See Description of the
notes included elsewhere in this prospectus. In addition,
the assets of our broker-dealer and certain of our other
subsidiaries are not part of the collateral securing the notes
and note guarantees. If an event of default occurs and the notes
are accelerated, the notes and the note guarantees rank equally
with the holders of other unsubordinated and unsecured
indebtedness of the relevant entity with respect to such
excluded property.
To the extent that the claims of the holders of the notes and
the holders of the other indebtedness and obligations secured by
the collateral exceed the value of the assets securing the notes
and such other indebtedness and obligations, those claims will
rank equally with the claims of the holders of unsecured and
unsubordinated creditors. As a result, if such proceeds were not
sufficient to repay amounts outstanding under the notes, then
holders of the notes (to the extent not repaid from the proceeds
of the sale of the collateral) would only have an unsecured
claim against our remaining assets.
The
Notes are Structurally Subordinated to Claims of Creditors of
Non-Guarantor Subsidiaries.
The notes are structurally subordinated to indebtedness and
other liabilities of subsidiaries that are not guarantors under
the notes including our Regulated Subsidiaries. Our
non-guarantor subsidiaries had, before intercompany
eliminations, $3.0 billion of total liabilities, including
trade payables and $3.3 billion of total assets as of
December 31, 2011, and had operating revenue, before
intercompany eliminations, of $962.8 million for the year
ended December 31, 2011, respectively. Any right that we or
the Subsidiary Guarantors have to receive any assets of any of
the non-guarantor subsidiaries upon the liquidation or
reorganization of those subsidiaries, and the consequent rights
of holders of the notes to realize proceeds from the sale of any
of those subsidiaries assets, will be effectively
subordinated to the claims of those subsidiaries
creditors, including trade creditors and holders of preferred
equity interests of those subsidiaries. Accordingly, in the
event of a bankruptcy, liquidation or reorganization of any
future non-guarantor subsidiaries, such non-guarantor
subsidiaries will pay the holders of their debts, holders of
their preferred equity interests and their trade creditors
before they will be able to distribute any of their assets to us.
18
Because
Each Subsidiary Guarantors Liability Under its Note
Guarantee May be Reduced to Zero, Avoided or Released Under
Certain Circumstances, You May not Receive Any Payments From
Some or all of the Subsidiary Guarantors.
Although you have the benefit of the note guarantees, a note
guarantee is limited to the maximum amount that the applicable
Subsidiary Guarantor is permitted to guarantee under applicable
law. As a result, a Subsidiary Guarantors liability under
its note guarantee could be reduced to zero, depending upon the
amount of other obligations of such Subsidiary Guarantor.
Further, under the circumstances discussed more fully below, a
court under federal and state fraudulent conveyance and transfer
statutes could void the obligations under a note guarantee or
further subordinate it to all other obligations of the
Subsidiary Guarantor. See Federal and
state fraudulent transfer laws may permit a court to void the
notes and the note guarantees, subordinate claims in respect of
the notes and any guarantees and require noteholders to return
payments received and, if that occurs, you may not receive any
payments on the notes included elsewhere in this
prospectus. In addition, you will lose the benefit of a
particular note guarantee if it is released under certain
circumstances described under Description of the
notes Use and Release of Collateral.
There
May not be Sufficient Collateral to Pay all or Any of the Notes,
Especially if We Incur Additional Secured Indebtedness as
Permitted Under the Notes, Which Will Dilute the Value of the
Collateral Securing the Notes.
Under the terms of the indenture governing the notes we are also
permitted in the future to incur additional indebtedness and
other obligations that may share in the liens on the collateral
securing the notes. Any additional obligations secured by a lien
on the collateral (whether senior to or equal with the lien of
the notes) will dilute the value of the collateral.
The proceeds from the sale of all such collateral may not be
sufficient to satisfy the amounts outstanding under the notes
and all other indebtedness and obligations secured by such
liens. If such proceeds were not sufficient to repay amounts
outstanding under the notes, then holders of the notes (to the
extent not repaid from the proceeds of the sale of the
collateral) would only have an unsecured claim against our
remaining assets.
You
May Have Limited Rights to Enforce Remedies Under the Security
Documents, and the Collateral may be Released Without Your
Consent in Certain Circumstances.
If we issue additional pari passu lien indebtedness, subject to
our compliance with the restrictive covenants in the indenture
governing the notes at the time we issue such additional senior
secured indebtedness, the collateral agent will enter into an
intercreditor agreement with the collateral agent for the
holders of such additional pari passu lien indebtedness. Under
the terms of the intercreditor agreement, the collateral agent
will pursue remedies and take other action related to the
collateral, including the release thereof, pursuant to the
direction of the authorized representative for the holders of
the largest class of outstanding obligations secured by liens on
the collateral, including the notes. There can be no assurance
that the notes will always represent the largest class of
obligations secured by liens on the collateral. Accordingly,
note holders may not always have the right to control the
remedies and the taking of other actions related to the
collateral.
In addition, all collateral sold or otherwise disposed of in
accordance with the terms of the documents governing the pari
passu lien obligations will automatically be released from the
lien securing the notes and the lien securing the other pari
passu lien obligations. Accordingly, any such sale or other
disposition in a transaction that does not violate the asset
disposition covenant of the indenture governing the notes may
result in a release of the collateral subject to such sale or
disposition. See Description of the
notes Limitation on Asset Sales.
Under the intercreditor agreement, the collateral agent may not
object following the filing of a bankruptcy petition to any
debtor-in-possession
financing or to the use of the collateral to secure that
financing, subject to conditions and limited exceptions, if at
such time the notes are not the largest class of outstanding
obligations
19
secured by liens on the collateral. After such a filing, the
value of the collateral could materially deteriorate, and the
note holders would be unable to raise an objection.
Rights
of Holders of the Notes in the Collateral may be Adversely
Affected by the Failure to Perfect Security Interests in
Collateral.
Applicable law requires that a security interest in certain
tangible and intangible assets can only be properly perfected
and its priority retained through certain actions undertaken by
the secured party. The liens on the collateral securing the
notes and the note guarantees may not be perfected with respect
to the claims of the notes and the note guarantees if the
collateral agent is not able to take the actions necessary to
perfect any of these liens on or prior to the date of the
indenture.
The Company and the Subsidiary Guarantors have limited
obligations to perfect the security interest for the benefit of
the holders of the notes in specified collateral. There can be
no assurance that the trustee or the collateral agent for the
notes will monitor, or that we will inform such trustee or
collateral agent of, the future acquisition of assets and rights
that constitute collateral, and that the necessary action will
be taken to properly perfect the security interest in such
after-acquired collateral. Neither the trustee nor the
collateral agent for the notes has an obligation to monitor the
acquisition of additional assets or rights that constitute
collateral or the perfection of any security interest. Such
failure to monitor may result in the loss of the security
interest in the collateral or the priority of the security
interest in favor of the notes and the note guarantees against
third parties.
Security
Over Certain Collateral May not be in Place by the Closing Date
of this Offering or May not be Perfected on the Closing Date of
this Offering, Which Means that the Notes Will not be Secured to
that Extent.
Certain recordations, notices, filings and other actions to
create, perfect or protect the priority of the liens securing
the notes and the note guarantees will be taken subsequent to
the issuance of the notes. Any delay in such recordations,
notices, filings and other actions increase the risk that the
liens could be voided or subject to the liens of intervening
creditors. To the extent any security interest in the collateral
securing the notes cannot be perfected or a valid lien created
with respect thereto on or prior to the closing date, we will be
required to have all such security interests perfected
and/or valid
liens created, to the extent required by the indenture and the
security documents, promptly following the closing date, but in
any event no later than 60 days after such date and no
later than 90 days after such date for deposit accounts. We
cannot assure you that we will be able to perfect
and/or
create a valid lien with respect to any such security interests
on or prior to that date, and our failure to do so may result in
a default under the indenture. To the extent a security interest
in any of the collateral is created or perfected following the
issuance date of the notes, the security interest would remain
at risk of being voided as a preferential transfer by a trustee
in bankruptcy or being subject to the liens of intervening
creditors.
We May
not be Able to Repurchase the Notes Upon a Change of
Control.
Upon the occurrence of specific kinds of change of control
events, we will be required to offer to repurchase all
outstanding notes at 101% of their principal amount plus accrued
and unpaid interest. The source of funds for any such purchase
of the notes will be our available cash or cash generated from
our and our subsidiaries operations or other sources,
including borrowings, sales of assets or sales of equity. We may
not be able to repurchase the notes upon a change of control
because we may not have sufficient financial resources to
purchase all of the notes that are tendered upon a change of
control. Accordingly, we may not be able to satisfy our
obligations to purchase the notes unless we are able to obtain
financing. Our failure to repurchase the notes upon a change of
control would cause a default under the indenture governing the
notes.
In addition, the change of control provisions in the indenture
may not protect you from certain important corporate events,
such as a leveraged recapitalization (which would increase the
level of our indebtedness), reorganization, restructuring,
merger or other similar transaction, unless such transaction
constitutes a Change of Control under the indenture.
Such a transaction may not involve a change in voting power or
beneficial
20
ownership or, even if it does, may not involve a change that
constitutes a Change of Control as defined in the
indenture that would trigger our obligation to repurchase the
notes. Therefore, if an event occurs that does not constitute a
Change of Control as defined in the indenture, we
will not be required to make an offer to repurchase the notes
and you may be required to continue to hold your notes despite
the event. See Description of the notes
Repurchase of the Notes upon a Change of Control.
In the
Event of a Bankruptcy of the Company or any of the Subsidiary
Guarantors, Holders of the Notes May be Deemed to Have an
Unsecured Claim to the Extent that Obligations in Respect of the
Notes Exceed the Fair Market Value of the Collateral Securing
the Notes.
In any bankruptcy case under Title 11 of the United States
Code, as amended, or the Bankruptcy Code, with respect to the
Company or any of the Subsidiary Guarantors, it is possible that
the bankruptcy trustee, the
debtor-in-possession
or competing creditors will assert that the value of the
collateral with respect to the notes on the date of such
valuation is less than the then-current principal amount of the
notes and all other obligations with equal and ratable security
interests in the collateral. Upon a finding by the bankruptcy
court that the notes are under-collateralized, the claims in the
bankruptcy case with respect to the notes would be bifurcated
between a secured claim and an unsecured claim, and the
unsecured claim would not be entitled to the benefits of
security in the collateral. Other consequences of a finding of
under-collateralization would be, among other things, a lack of
entitlement on the part of the notes to receive post-petition
interest and a lack of entitlement on the part of the unsecured
portion of the notes to receive adequate protection
under the Bankruptcy Code. In addition, if any payments of
post-petition interest had been made prior to the time of such a
finding of under-collateralization, those payments could be
recharacterized by the bankruptcy court as a reduction of the
principal amount of the secured claim with respect to the notes.
Bankruptcy
Laws May Limit the Ability of Holders of the Notes to Realize
Value From the Collateral.
The right of the collateral agent to repossess and dispose of
the collateral upon the occurrence of an event of default under
the indenture is likely to be significantly impaired by
applicable bankruptcy law if a bankruptcy case were to be
commenced by or against the Company or any of the Subsidiary
Guarantors before the collateral agent repossessed and disposed
of the collateral. For example, under the Bankruptcy Code,
pursuant to the automatic stay imposed upon the bankruptcy
filing, a secured creditor is prohibited from repossessing its
collateral from a debtor in a bankruptcy case, or from disposing
of collateral repossessed from such debtor, or taking other
actions to levy against a debtor, without bankruptcy court
approval after notice and a hearing. Moreover, the Bankruptcy
Code permits the debtor to continue to retain and to use
collateral even though the debtor is in default under the
applicable debt instruments, provided that the secured creditor
is given adequate protection. The meaning of the
term adequate protection is undefined in the
Bankruptcy Code and may vary according to circumstances (and is
within the discretion of the bankruptcy court), but it is
intended in general to protect the secured creditors
interest in the collateral from diminishing in value during the
pending of the bankruptcy case and may include periodic payments
or the granting of additional security, if and at such times as
the court in its discretion determines, for any diminution in
the value of the collateral as a result of the automatic stay or
any use of the collateral by the debtor during the pendency of
the bankruptcy case. A bankruptcy court could conclude that the
secured creditors interest in its collateral is
adequately protected against any diminution in value
during the bankruptcy case without the need of providing any
additional adequate protection. Due to the imposition of the
automatic stay, the lack of a precise definition of the term
adequate protection and the broad discretionary
powers of a bankruptcy court, it is impossible to predict
(i) how long payments under the notes could be delayed, or,
if made at all, following commencement of a bankruptcy case,
(ii) whether or when the collateral agent could repossess
or dispose of the collateral or (iii) whether or to what
extent holders of the notes would be compensated for any delay
in payment or loss of value of the collateral through the
requirement of adequate protection. The note holders
may receive in exchange for their claims a recovery that could
be substantially less than the amount of their claims
(potentially even nothing) and any such recovery could be in the
form of cash, new debt instruments or some other security.
21
In addition to the limitations described above, the collateral
agents ability to exercise remedies with respect to the
collateral on behalf of the note holders may also be challenged
on the basis of the collateral agents security interest
not being perfected (or in the case of equity interests in
foreign subsidiaries or their obligations, if any, included in
the collateral, on grounds that such security interests are not
created or perfected in accordance with applicable foreign law),
the consent of third parties, contractual restrictions, priority
issues, state law requirements and practical problems associated
with the realization of the collateral agents security
interest in the collateral securing the notes, including cure
rights, foreclosing on the collateral within the time periods
permitted by third parties or prescribed by laws, statutory
rights of redemption and the effect of the order of foreclosure.
For example, the collateral agent may need to obtain the consent
of a third party to obtain or enforce a security interest in a
contract. We cannot assure you that the collateral agent will be
able to obtain any such consent, transfer or maintain in effect
any such contracts. Accordingly, the collateral agent may not
have the ability to foreclose upon those assets and the value of
the collateral may significantly decrease.
Any
Future Pledge of Collateral or Guarantee in Favor of the Holders
of the Notes Might be Voidable in Bankruptcy.
Any future pledge of collateral or guarantee in favor of the
holders of the notes might be voidable (that is, cancelled) in a
bankruptcy case of the pledgor or Subsidiary Guarantor if
certain events or circumstances exist or occur, including, under
the Bankruptcy Code, if the pledgor or Subsidiary Guarantor is
insolvent at the time of the pledge or guarantee, the pledge or
guarantee enables the holders of the notes to receive more than
they would if the pledge or guarantee had not been made and the
debtor were liquidated under chapter 7 of the Bankruptcy
Code, and a bankruptcy case in respect of the pledgor is
commenced within 90 days following the pledge (or one year
before commencement of a bankruptcy case if the creditor that
benefited from the lien or guarantee is an insider
under the Bankruptcy Code).
The
Notes Could be Wholly or Partially Voided as a Preferential
transfer.
If we become the subject of a bankruptcy proceeding within
90 days after the date of the indenture (or, with respect
to any insiders specified in bankruptcy law who are holders of
the notes, within one year after we issue the notes), and the
court determines that we were insolvent at the time of the
closing (under the preference laws, we would be presumed to have
been insolvent on and during the 90 days immediately
preceding the date of filing of any bankruptcy petition), the
court could find that the incurrence of the obligations under
the notes involved a preferential transfer. In addition, to the
extent that certain of our collateral is not perfected until
after closing, such
90-day
preferential transfer period would begin on the date of
perfection. If the court determined that the granting of the
security interest was therefore a preferential transfer, which
did not qualify for any defense under bankruptcy law, then
holders of the notes would be unsecured creditors with claims
that ranked pari passu with all other unsecured creditors of the
applicable obligor, including trade creditors. In addition,
under such circumstances, the value of any consideration holders
received pursuant to the notes, including upon foreclosure of
the collateral securing the notes and the note guarantees, could
also be subject to recovery from such holders and possibly from
subsequent assignees, or such holders might be returned to the
same position they held as holders of the notes.
Federal
and State Fraudulent Transfer Laws May Permit a Court to Void
the Notes and the Note Guarantees, Subordinate Claims in Respect
of the Notes and Any Guarantees and Require Noteholders to
Return Payments Received and, if That Occurs, You May not
Receive any Payments on the Notes.
Federal and state fraudulent transfer and conveyance statutes
may apply to the issuance of the notes, the incurrence of any
guarantees of the notes entered into upon issuance of the notes
and subsidiary guarantees that may be entered into thereafter
under the terms of the indenture governing the notes and the
granting of liens to secure the notes and the guarantees. Under
federal bankruptcy law and comparable provisions of state
fraudulent transfer or conveyance laws, which may vary from
state to state, the notes, any guarantee or any of the liens
securing the notes and the guarantees could be voided as a
fraudulent transfer or conveyance if (1) we or any of the
guarantors, as applicable, issued the notes, incurred its
guarantee or granted the liens with
22
the intent of hindering, delaying or defrauding creditors or
(2) we or any of the guarantors, as applicable, received
less than reasonably equivalent value or fair consideration in
return for issuing the notes, incurring its guarantee or
granting the liens and, in the case of (2) only, one of the
following is also true at the time thereof:
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we or any of the guarantors, as applicable, were insolvent or
rendered insolvent by reason of the issuance of the notes or the
incurrence of the guarantees;
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the issuance of the notes or the incurrence of the guarantees
left us or any of the guarantors, as applicable, with an
unreasonably small amount of capital to carry on the
business; or
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we or any of the guarantors intended to, or believed that we or
such guarantor would, incur debts beyond our or such
guarantors ability to pay such debts as they mature.
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A court would likely find that we or a guarantor did not receive
reasonably equivalent value or fair consideration for the notes
or such guarantee if we or such guarantor did not substantially
benefit directly or indirectly from the issuance of the notes or
the applicable guarantee. As a general matter, value is given
for a transfer or an obligation if, in exchange for the transfer
or obligation, property is transferred or new or antecedent debt
is secured or satisfied.
We cannot be certain as to the standards a court would use to
determine whether or not we or the guarantors were solvent at
the relevant time or, regardless of the standard that a court
uses, that the issuance of the guarantees would not be further
subordinated to our or any of our guarantors other debt.
Generally, however, an entity would be considered solvent if, at
the time it incurred indebtedness:
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the sum of its debts, including contingent liabilities, was
greater than the fair saleable value of all its assets; or
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the present fair saleable value of its assets was less than the
amount that would be required to pay its probable liability on
its existing debts, including contingent liabilities, as they
become absolute and
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mature; or
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it could not pay its debts as they become due.
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If a court were to find that the issuance of the notes or the
incurrence of the guarantee was a fraudulent transfer or
conveyance, the court could void the payment obligations under
the notes or such guarantee or subordinate the notes or such
guarantee to presently existing and future indebtedness of ours
or of the related guarantor, or require the holders of the notes
to repay any amounts received with respect to such guarantee. In
addition, the court may avoid and set aside the liens securing
the collateral. In the event of a finding that a fraudulent
transfer or conveyance occurred, you may not receive any
repayment on the notes.
Although each guarantee entered into by a subsidiary will
contain a provision intended to limit that guarantors
liability to the maximum amount that it could incur without
causing the incurrence of obligations under its guarantee to be
a fraudulent transfer, this provision may not be effective to
protect those guarantees from being voided under fraudulent
transfer law, or may reduce that guarantors obligation to
an amount that effectively makes its guarantee worthless.
Your
Ability to Transfer the Notes may be Limited by the Absence of
an Active Trading Market, and There is no Assurance That any
Active Trading Market Will Develop for the Notes.
The notes are new issues of securities for which there is no
established public market. We do not intend to have the notes
listed on a national securities exchange or included in any
automated quotation system.
The initial purchasers have advised us that Morgan
Stanley & Co. Incorporated currently intends to make a
market in the notes and Oppenheimer & Co. Inc. may
make a market in the notes, each as permitted by applicable laws
and regulations. However, the initial purchasers are not
obligated to do so, and the may discontinue any market-making
activities with respect to the notes at any time without notice.
The liquidity of any market for the notes will depend upon the
number of holders of the notes, our performance, the market
23
for similar securities, the interest of securities dealers in
making a market in the notes and other factors. If a market
develops, the notes could trade at prices that may be lower than
the initial offering price of the notes. If an active market
does not develop or is not maintained, the price and liquidity
of the notes may be adversely affected. Historically, the market
for non-investment grade debt has been subject to disruptions
that have caused substantial volatility in the prices of
securities similar to the notes. The market, if any, for any of
the notes may not be free from similar disruptions and any such
disruptions may adversely affect the prices at which you may
sell your notes. In addition, subsequent to their initial
issuance, the notes may trade at a discount from their initial
offering price, depending upon prevailing interest rates, the
market for similar notes, our performance and other factors.
A
Lowering or Withdrawal of the Ratings Assigned to Our Debt
Securities by Rating Agencies May Increase Our Future Borrowing
Costs and Reduce Our Access to Capital.
Our debt currently has a non-investment grade rating, and there
can be no assurance that any rating assigned by the rating
agencies will remain for any given period of time or that a
rating will not be lowered or withdrawn entirely by a rating
agency if, in that rating agencys judgment, future
circumstances relating to the basis of the rating, such as
adverse changes, so warrant. A lowering or withdrawal of the
ratings assigned to our debt securities by rating agencies may
increase our future borrowing costs and reduce our access to
capital, which could have a material adverse impact on our
financial condition and results of operations.
The
Market Price for the Notes May be Volatile.
Historically, the market for non-investment grade debt has been
subject to disruptions that have caused substantial fluctuations
in the price of the securities. Even if a trading market for the
notes develops, it may be subject to disruptions and price
volatility. Any disruptions may have a negative effect on note
holders, regardless of our prospects and financial performance.
An
Increase in Market Interest Rates Could Result in a Decrease in
the Value of the Notes.
In general, the market value of already outstanding debt
instruments similar to the notes bearing interest at a fixed
rate will decline if and as market interest rates for similar
instruments of issuers generally rise. Consequently, if you
purchase the notes and market interest rates increase, the
market value of your notes may decline. We cannot predict the
future level of market interest rates.
Certain
Covenants Contained in the Indenture Will not be Applicable
During Any Period in Which the Notes are Rated Investment
Grade.
The indenture governing the notes provides that certain
covenants will not apply to us during any period in which the
notes are rated investment grade by either Standard &
Poors or Moodys and no default has otherwise
occurred and is continuing under the indenture. The covenants
that would be suspended include, among others, restrictions on
our ability to pay dividends, incur indebtedness, sell certain
assets, enter into transactions with affiliates and to enter
into certain other transactions. Any actions that we take while
these covenants are not in force will be permitted even if the
notes are subsequently downgraded below investment grade and
such covenants are subsequently reinstated. There can be no
assurance that the notes will ever be rated investment grade, or
that if they are rated investment grade, the notes will maintain
such ratings. Holders of notes will have no recourse against us
or any other parties in the event of a change in or suspension
or withdrawal of such ratings. Any lowering, suspension or
withdrawal of such ratings may have an adverse effect on the
market price or marketability of the notes.
24
USE OF
PROCEEDS
This prospectus is delivered in connection with offers and sales
of notes by Oppenheimer & Co. Inc. in market-making
transactions. We will not receive any proceeds from these
transactions.
25
RATIO OF
EARNINGS TO FIXED CHARGES
We present below our ratio of earnings to fixed charges, which
is computed by dividing earnings, which is the sum of profit
(loss) before income taxes and fixed charges, by fixed charges.
Fixed charges represent interest expense, amortization of debt
issuance costs, and an appropriate portion of rentals
representative of the interest factor.
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Year Ended December 31,
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2011
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2010
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2009
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2008
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2007
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(Dollars in millions)
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Profit (Loss) Before Income Taxes
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$
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17,848
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$
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67,991
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$
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37,067
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$
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(36,566
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$
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127,394
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Add Fixed Charges:
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Interest Expense(1)
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38,026
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25,750
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21,429
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39,137
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56,643
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Amortization of Debt Issuance Costs
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986
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643
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1,164
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1,227
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1,218
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Appropriate Portion of Rentals Representative of the Interest
Factor(2)
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16,994
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16,793
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16,853
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15,687
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11,036
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Total Fixed Charges
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56,006
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43,186
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39,446
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56,051
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68,897
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Earnings
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73,854
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111,177
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76,513
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19,485
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196,291
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Ratio of Earnings to Fixed Charges(3)
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1.3
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2.6
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1.9
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2.8
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(1) |
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Includes interest expenses on short-term borrowings including
bank call loans, securities lending, and repurchase agreements
which generally have a corresponding asset that generates
interest income that substantially offsets or exceeds the
aforementioned interest expense. |
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The percent of rent included in the computation is a reasonable
approximation of the interest factor. |
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(3) |
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Due to the Companys pre-tax loss in the year ended
December 31, 2008 the ratio coverage was less than 1:1 in
this period. The Company would have needed to generate
additional earnings of $36 million to achieve a coverage of
1:1. |
26
DESCRIPTION
OF THE NOTES
The 8.75% Senior Secured Notes due 2018 (the
notes) were issued under an indenture, dated
as of the April 12, 2011 (the Indenture)
among us, as issuer, the Subsidiary Guarantors party thereto and
The Bank of New York Mellon Trust Company, N.A., as trustee
(in such capacity, the Trustee), and as
collateral agent (in such capacity, the Collateral
Agent).
The following is a summary of certain of the material provisions
of the Indenture, the Registration Rights Agreement and the
Security Documents but does not restate such documents in their
entirety. We urge you to read the Indenture, the Registration
Rights Agreement and the Security Documents because they, and
not this description, define your rights as holders of the notes
(the Holders). We will provide you with
copies of the Indenture and the Security Documents upon request.
Copies of the Registration Rights Agreement referred to herein
are available as described in Additional
Information. The terms of the notes include those stated
in the Indenture and the Security Documents and those made part
of the Indenture by reference to the Trust Indenture Act of
1939, as amended (the TIA). For purposes of
this Description of the notes, the terms
we, us, our or the
Company means Oppenheimer Holdings, Inc. and its
successors under the Indenture, in each case excluding its
subsidiaries.
Certain of our subsidiaries, which we refer to as our Regulated
Subsidiaries, are not subject to all of the restrictive
covenants in the Indenture which place limitations on our
actions, and where they are subject to covenants, there are
numerous exceptions and limitations. As of December 31,
2011, Regulated Subsidiaries represented, before intercompany
eliminations, 89% of our total assets. For the year ended
December 31, 2011, Regulated Subsidiaries represented,
before intercompany eliminations, 90% of our total revenues.
General
The notes are our senior secured obligations, initially limited
to $200,000,000 aggregate principal amount. The notes mature on
April 15, 2018. Subject to the covenants described below
under Covenants and applicable law, the
Company may issue additional notes (Additional
Notes) under the Indenture. References to notes means
the notes initially issued and any Additional Notes provided
that the Company Incurred such Additional Notes in
compliance with the covenant described under the caption
Covenants Limitation on
Indebtedness and Issuances of Preferred Stock below. The
notes and any Additional Notes would be treated as a single
class for all purposes under the Indenture; provided that
if the Additional Notes are not fungible with the notes and any
exchange notes for U.S. federal income tax purposes, the
Additional Notes will have a separate CUSIP number.
Interest on the notes will accrue, from the Closing Date, at the
rate per annum shown on the cover page hereof and will be
payable semiannually in cash on each April 15 and
October 15, commencing October 15, 2011. We will make
interest payments on the notes to the persons who are registered
holders at the close of business on the April 1 and October 1
immediately preceding the applicable interest payment date.
Interest on the notes will accrue from the most recent date on
which interest on the notes was paid or, if no interest has been
paid, from and including the date on which the notes were
originally issued. Interest will be computed on the basis of a
360-day year
of twelve
30-day
months.
Optional
Redemption
We may redeem the notes at any time on or after April 15,
2014. The redemption price for the notes (expressed as a
percentage of principal amount), will be as follows, plus
accrued interest and Additional Interest (if any) to, but not
including, the redemption date:
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If Redeemed During the 12-Month Period Commencing April
15,
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Redemption Price
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2014
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106.563%
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2015
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104.375%
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2016
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102.188%
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2017 and thereafter
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100.000%
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In addition, prior to April 15, 2014, the Company may
redeem the notes at its option, in whole at any time or in part
from time to time, at a redemption price equal to 100% of the
principal amount of the notes redeemed plus the Applicable
Premium as of, and accrued and unpaid interest and Additional
Interest (if any) to, but not including, the applicable
redemption date.
In addition, at any time prior to April 15, 2014, we may
redeem up to 35% of the principal amount of the notes with the
Net Cash Proceeds of one or more sales of our Capital Stock
(other than Disqualified Stock) at a redemption price of 108.75%
of their principal amount, plus accrued interest and Additional
Interest (if any) to, but not including, the redemption date;
provided that at least 65% of the original aggregate
principal amount of notes (calculated after giving effect to any
issuance of Additional Notes) remains outstanding after each
such redemption and notice of any such redemption is mailed
within 90 days of each such sale of Capital Stock.
We will give not less than 30 days nor more than
90 days notice of any redemption. If less than all of
the notes are to be redeemed, selection of the notes for
redemption will be made by the Trustee:
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in compliance with the requirements of the principal national
securities exchange, if any, on which the notes are
listed, or
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if the notes are not listed on a national securities exchange,
by lot or by such other method as the Trustee in its sole
discretion shall deem to be fair and appropriate.
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However, no note of $2,000 in principal amount or less shall be
redeemed in part. If any note is to be redeemed in part only,
the notice of redemption relating to such note will state the
portion of the principal amount to be redeemed. A new note in
principal amount equal to the unredeemed portion will be issued
upon cancellation of the original note.
Ranking
The payment of the principal of, premium, if any, and interest
and Additional Interest on the notes and the payment of any
Subsidiary Guarantee:
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ranks effectively senior in right of payment to all unsecured
and unsubordinated obligations of the Company or the relevant
Subsidiary Guarantor, to the extent of the value of the
Collateral owned by the Company or such Subsidiary Guarantor
(and, to the extent of any unsecured remainder after payment of
the value of the Collateral, rank equally in right of payment
with such unsecured and unsubordinated Indebtedness of the
Company);
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is secured on a first-priority basis by the Collateral, subject
to certain Permitted Liens and it is intended that Pari Passu
Lien Indebtedness will be secured on an equal and ratable basis;
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ranks senior in right of payment to any subordinated debt of the
Company or such Subsidiary Guarantor; and
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ranks effectively junior in right of payment to all existing and
future indebtedness, claims of holders of Preferred Stock and
other liabilities (including trade payables) of Subsidiaries of
the Company that are not guarantors, including all Regulated
Subsidiaries and Unrestricted Subsidiaries.
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As of December 31, 2011, we had $195 million of senior
debt, $195 million of which was secured, and no
subordinated debt. Although the Indenture contains limitations
on the amount of additional Indebtedness and secured
Indebtedness that the Company and its Restricted Subsidiaries
may incur, the amount of additional Indebtedness, including
secured Indebtedness, could be substantial. In addition, the
Company and its Restricted Subsidiaries may, subject to certain
conditions, incur Indebtedness (including Additional Notes) in
addition to the notes that is entitled to be secured by the
Collateral on a ratable basis with the notes. See
Limitation on Indebtedness and Issuances of
Preferred Stock.
We currently derive the majority of our revenue from the
operations of our Regulated Subsidiaries. As our obligations
under the notes are not guaranteed by our Regulated
Subsidiaries, creditors of a Regulated Subsidiary, including
trade creditors, customers, and preferred stockholders, if any,
of such Regulated
28
Subsidiary generally will have priority with respect to the
assets and earnings of such Regulated Subsidiary over the claims
of the Holders.
The notes, therefore, are effectively subordinated to the claims
of creditors, including trade creditors, customers and preferred
stockholders, if any, of our Regulated Subsidiaries. As of
December 31, 2011, our Regulated Subsidiaries had
$2.9 billion outstanding in such liabilities.
The Indenture does not treat (1) unsecured Indebtedness as
subordinated or junior to Secured Indebtedness merely because it
is unsecured, (2) Indebtedness as subordinated or junior to
any other Indebtedness merely because it has a junior priority
with respect to the same collateral or (3) Indebtedness
that is not guaranteed as subordinated or junior to Indebtedness
that is guaranteed merely because of such guarantee.
Subsidiary
Guarantees
The Subsidiary Guarantors have, jointly and severally, fully and
unconditionally guaranteed, on a senior secured basis, the
Companys obligations under the notes and the Indenture
(each such guarantee, a Subsidiary
Guarantee). Each Subsidiary Guarantee is secured on a
first-priority basis, subject to Permitted Liens, together with
all other Pari Passu Lien Indebtedness of the Subsidiary
Guarantors, by the Collateral owned by such Subsidiary Guarantor
to the extent set forth under Security.
The obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee include a limitation intended to prevent
that Subsidiary Guarantee from constituting a fraudulent
conveyance or fraudulent transfer under applicable law. It is
uncertain, however, whether such provisions would be effective
to prevent the Subsidiary Guarantees from constituting a
fraudulent conveyance or fraudulent transfer under applicable
law. See Risk factors Risk related to the
Notes Under certain circumstances a court could
cancel the notes or the related guarantees and the security
interests that secure the notes and any Subsidiary Guarantees
under fraudulent conveyance laws. Most of the
Companys Subsidiaries do not Guarantee the notes
including, without limitation, Regulated Subsidiaries. As of and
for the year ended December 31, 2011, the Companys
Subsidiaries that will not Guarantee the notes represented,
before intercompany eliminations, 93% of our total assets. For
the year ended December 31, 2011, the Companys
Subsidiaries that will not Guarantee the notes represented,
before intercompany eliminations, 100% our revenue.
Each Subsidiary Guarantee by a Subsidiary Guarantor under the
Indenture and the obligations of such Subsidiary Guarantor under
the Security Agreement and other Security Documents to which it
is a party, are automatically and unconditionally released and
discharged upon:
(i) any sale, exchange or transfer (by merger or otherwise)
of the Capital Stock of such Subsidiary Guarantor, following
which such Subsidiary Guarantor ceases to be a direct or
indirect Subsidiary of the Company if such sale or disposition
either does not constitute an Asset Sale or does constitute an
Asset Sale effected in compliance with the covenants set forth
under Limitation on Asset Sales and
Consolidation, Merger and Sale of Assets;
(ii) if such Subsidiary Guarantor is dissolved or
liquidated;
(iii) the designation of any Restricted Subsidiary that is
a Subsidiary Guarantor as an Unrestricted Subsidiary in
compliance with the applicable provisions of the
Indenture; or
(iv) the exercise by the Company of its legal defeasance
option or covenant defeasance option as described under
Defeasance or the discharge of the
Companys obligations under the Indenture in accordance
with the terms of the Indenture.
Security
The obligations of the Company with respect to the notes and the
obligations of the Subsidiary Guarantors under the Subsidiary
Guarantees are secured by a first-priority security interest,
subject to
29
Permitted Liens, in substantially all of the Companys and
the Subsidiary Guarantors existing and future tangible and
intangible assets, including (without limitation):
(a) 100% of the Capital Stock of or Equity Interests in
direct Domestic Subsidiaries owned by the Company and the
Subsidiary Guarantors and 65% of the voting stock and 100% of
the non-voting stock of direct Subsidiaries that are not
Domestic Subsidiaries owned by the Company and the Subsidiary
Guarantors;
(b) accounts;
(c) equipment, goods, inventory and fixtures;
(d) documents, instruments and chattel paper;
(e) investment property;
(f) general intangibles (including intellectual property);
(g) deposit accounts;
(h) money;
(i) supporting obligations;
(j) books and records;
(k) present and future real estate (other than any leased
real property and any owned real property having a purchase
price of less than $5.0 million (Excluded Real
Property)); and
(l) proceeds of each of the foregoing (collectively, the
Collateral).
Notwithstanding the foregoing, the Collateral does not include
any of the following assets (collectively, the Excluded
Property):
(1) any asset or property right of the Company or any
Subsidiary Guarantor of any nature:
(a) if the grant of a security interest shall constitute or
result in (i) the abandonment, invalidation or
unenforceability of such asset or property right or the Company
or any Subsidiary Guarantor loss of use of such asset or
property right or (ii) a breach, termination or default
under any lease, license, contract, property right, permit or
agreement (other than to the extent that any such term would be
rendered ineffective pursuant to
Sections 9-406,
9-407, 9-408 or 9-409 of the Uniform Commercial Code (or any
successor provision or provisions) of any relevant jurisdiction
or any other applicable law (including the U.S. Bankruptcy
Code) or principles of equity) to which the Company or such
Subsidiary Guarantor is party;
(b) to the extent that any applicable law or regulation
prohibits the creation of a security interest thereon (other
than to the extent that any such term would be rendered
ineffective pursuant to
Sections 9-406,
9-407, 9-408 or 9-409 of the UCC (or any successor provision or
provisions) of any relevant jurisdiction or any other applicable
law or principles of equity);
(2) Equity Interests of each class of voting equity
interests issued by any first-tier Subsidiary that is not a
Domestic Subsidiary in excess of 65% of such class of voting
Equity Interests issued by such first-tier Subsidiary and
all the Equity Interests in Oppenheimer Cooperative U.A., an
entity formed under the laws of the Netherlands;
(3) Capital Stock of (i) Oppenheimer
Trust Company, a corporation formed under the laws of
New Jersey and Oppenheimer Cooperative U.A., an entity
formed under the laws of the Netherlands, (ii) any Foreign
Subsidiary that is not a first-tier Foreign Subsidiary and
(iii) in the case of Capital Stock of any Subsidiary, only
to the extent that the value thereof, together with the value of
all promissory notes or other instruments payable by such
Subsidiary constituting Collateral, equals 20% or more of the
notes plus the principal amount at maturity of any other
collateral permitted to be taken into consideration in
30
determining whether separate financial information with respect
to the issuer thereof would be required to be filed pursuant to
Rule 3-16
of
Regulation S-X;
(4) promissory notes or other instruments payable by any
Subsidiary, to the extent that the value thereof, together with
the value of all Capital Stock of such Subsidiary constituting
Collateral, equals 20% or more of the notes plus the principal
amount at maturity of any other collateral permitted to be taken
into consideration in determining whether separate financial
information with respect to the issuer thereof would be required
to be filed pursuant to
Rule 3-16
of
Regulation S-X;
(5) any foreign intellectual property and any assets
located outside the United States to the extent a Lien on such
assets cannot be perfected by the filing of Uniform Commercial
Code financing statements;
(6) any applications for trademarks or service marks filed
in the United States Patent and Trademark Office (the
PTO) pursuant to 15 U.S.C.
§ 1051 Section 1(b) unless and until evidence of
use of the mark in interstate commerce is submitted to the PTO
pursuant to 15 U.S.C. § 1051 Section 1(c) or
Section 1(d);
(7) (i) deposit and securities accounts the balance of
which consists exclusively of (a) withheld income taxes and
federal, state or local employment taxes in such amounts as are
required to be paid to the IRS or state or local government
agencies within the following two months with respect to
employees of the Company or any of the Subsidiary Guarantors,
and (b) amounts required to be paid over to an employee
benefit plan pursuant to DOL Reg. Sec. 2510.3-102 on behalf of
or for the benefit of employees of the Company or any Subsidiary
Guarantor, and (ii) all segregated deposit accounts
constituting (and the balance of which consists solely of funds
set aside in connection with) tax accounts, payroll accounts and
trust accounts;
(8) cash and Cash Equivalents maintained in any account of
any Subsidiary Guarantor that is an investment adviser
registered under the Investment Advisers Act of 1940 so long as
such account is maintained to satisfy qualified professional
asset manager requirements under ERISA;
(9) deposit and securities accounts to the extent the
aggregate value of assets therein does not exceed
$2.0 million;
(10) motor vehicles and other similar assets in which a
Lien may be perfected only through compliance with a non-UCC
certificate of title statute of any state of the United States
of America or the District of Columbia, letter of credit rights
and commercial tort claims;
(11) equipment leased by the Company or any of its
Subsidiaries under a lease that prohibits the granting of a Lien
on such equipment;
(12) any leasehold improvements to the extent that the
grant of a security interest therein would violate the related
lease;
(13) assets subject to a purchase money lien, capitalized
lease obligation or similar arrangement, in each case as
permitted by the Indenture, to the extent that the contract or
other agreement in which such Lien is granted (or the
documentation providing for such capitalized lease obligation or
similar arrangement) prohibits such assets from being Collateral
and only for so long as such Lien remains outstanding;
(14) capital stock of or Equity Interests in any Person
other than Wholly Owned Subsidiaries to the extent not permitted
by the terms of such Persons organizational documents;
(15) any property and assets the pledge of which would
require governmental consent, approval, license or authorization;
(16) Excluded Real Property; and
(17) proceeds and products of any and all of the foregoing
excluded assets described in clauses (1) through
(16) above only to the extent such proceeds and products
would constitute property or assets of the type described in
clauses (1) through (16) above.
31
Certain security interests in the Collateral will not be in
place on the date of the indenture or will not be perfected on
the date of the indenture. The Company and the Subsidiary
Guarantors will use commercially reasonable efforts to perfect
on the date of the indenture the security interests in the
Collateral for the benefit of the holders of the notes that are
created on the date of the indenture, but to the extent any such
security interest cannot be perfected by such date, the Company
and the Subsidiary Guarantors will agree to do or cause to be
done all acts and things that may be reasonably required to have
all security interests in the Collateral duly created and
enforceable and perfected, to the extent required by the
Security Documents, promptly following the date of the
indenture, but in any event no later than 60 days
thereafter (or 90 days thereafter in the case of perfecting
security interests in deposit accounts).
It is intended that the obligations of the Company and the
Subsidiary Guarantors under the Additional Notes and other
Permitted Pari Passu Lien Obligations will be secured on an
equal and ratable basis with the obligations of the Company with
respect to the notes and the obligations of the Subsidiary
Guarantors under the Subsidiary Guarantees by a first-priority
security interest, subject to Permitted Liens, in the
Collateral. The respective rights in respect of the Collateral
of the Collateral Agent, the Trustee, the holders, any Pari
Passu Debt Collateral Agent and the other Pari Passu Secured
Parties will be subject to the terms of the Intercreditor
Agreement.
The Equity Interests or intercompany note of a Restricted
Subsidiary that are included in the Collateral will constitute
Collateral only to the extent that such Equity Interests or
intercompany note can secure the notes without
Rule 3-16
of
Regulation S-X
under the Securities Act (or any other law, rule or regulation)
requiring separate financial statements of such Restricted
Subsidiary to be filed with the SEC. In the event that
Rule 3-16
of
Regulation S-X
under the Securities Act requires or is amended, modified or
interpreted by the SEC to require (or is replaced with another
rule or regulation, or any other law, rule or regulation is
adopted, that would require) the filing with the SEC of separate
financial statements of any Restricted Subsidiary due to the
fact that such Restricted Subsidiarys Equity Interests or
intercompany note secures the notes, then the Equity Interests
or intercompany note of such Restricted Subsidiary shall
automatically be deemed not to be part of the Collateral. In
such event, the Security Documents may be amended or modified,
without the consent of any Holder of notes, to the extent
necessary to release the Liens on the Equity Interests or
intercompany note that is so deemed to no longer constitute part
of the Collateral.
In the event that
Rule 3-16
of
Regulation S-X
under the Securities Act is amended, modified or interpreted by
the SEC to permit (or is replaced with another rule or
regulation, or any other law, rule or regulation is adopted,
which would permit) such Restricted Subsidiarys Equity
Interests or intercompany note to secure the notes without the
filing with the SEC of separate financial statements of such
Restricted Subsidiary, then the Equity Interests or intercompany
note of such Restricted Subsidiary shall automatically be deemed
to be a part of the Collateral. In such event, the Security
Documents may be amended or modified, without the consent of any
Holder of notes, to the extent necessary to subject such Equity
Interests or intercompany note to the Liens under the Security
Documents.
In accordance with the limitations set forth in the immediately
two preceding paragraphs as in effect on the date hereof, the
Collateral will include Equity Interests or intercompany note of
any Restricted Subsidiaries, only to the extent that the
applicable value of such Equity Interests or intercompany note
(on a Restricted
Subsidiary-by-Restricted
Subsidiary basis) is less than 20% of the aggregate principal
amount of the notes outstanding. Accordingly, the portion of the
Equity Interests or intercompany note of Restricted Subsidiaries
constituting Collateral in the future may decrease or increase
as described above.
Unless and until all of the Equity Interests of and intercompany
notes issued by Oppenheimer & Co., Inc. are pledged as
Collateral without regard to this limitation,
Oppenheimer & Co., Inc. will remain a direct
Wholly-Owned Subsidiary of Viner Finance Inc. and the Company
shall not permit such Equity Interests or intercompany loans to
be subject to other Liens.
The Collateral was pledged pursuant to a security agreement (as
amended, supplemented or otherwise modified from time to time,
the Security Agreement) and other security
documents, in each case by and among the Company, the Subsidiary
Guarantors party thereto and the Collateral Agent. For the
avoidance of
32
doubt, no assets of any Subsidiary that is not a Subsidiary
Guarantor (including any Capital Stock owned by any such
Subsidiary) shall constitute Collateral.
No appraisals of any of the Collateral have been prepared by or
on behalf of the Company in connection with the issuance and
sale of the notes. The value of the Collateral is subject to
fluctuations based on factors that include, among others, the
condition of the particular assets and availability of competing
assets, general economic conditions, and the ability to realize
on the Collateral as part of a going concern and in an orderly
fashion to available and willing buyers and not under distressed
circumstances. By its nature, large portions of the Collateral
may be illiquid and may have no readily ascertainable market
value. Likewise, there can be no assurance that the Collateral
will be saleable, or, if saleable, that there will not be
substantial delays in its liquidation.
To the extent that third parties establish Liens on the
Collateral, such third parties could have rights and remedies
with respect to the assets subject to such Liens that, if
exercised, could adversely affect the value of the Collateral or
the ability of the Trustee or the Holders of the notes to
realize or foreclose on the Collateral. The Company may also
issue Additional Notes as described above or additional Pari
Passu Lien Indebtedness, which would be secured by the
Collateral, the effect of which will be to increase the amount
of Indebtedness secured by the Collateral.
In addition, the fact that the Collateral may be shared with
holders of Pari Passu Lien Indebtedness, that the Collateral
excludes certain property, and that certain creditors secured by
Permitted Liens may be entitled to a prior claim on certain
Collateral, there is no assurance that, in a foreclosure or
other exercise of remedies after an Event of Default will result
in proceeds of Collateral that are sufficient to repay the
notes, or that the amount of such proceeds so available would
not be substantially less than amounts owing under the notes.
Moreover, the ability of the holders to realize on the
Collateral may be subject to certain bankruptcy law limitations
in the event of a bankruptcy. If the proceeds of any of the
Collateral were not sufficient to repay all amounts due on the
notes, the Holders of the notes (to the extent not repaid from
the proceeds of the sale of the Collateral) would have only an
unsecured claim against the remaining assets of the Company and
the Subsidiary Guarantors.
Intercreditor
Agreement
If additional secured Indebtedness intended to constitute Pari
Passu Lien Indebtedness is issued or incurred in the future, the
Company, the Subsidiary Guarantors, the Collateral Agent, and
the Authorized Representative for the lenders and other persons
holding such additional secured debt (the Pari Passu
Debt Collateral Agent) will enter into an
Intercreditor Agreement (as the same may be amended,
supplemented or otherwise modified from time to time, the
Intercreditor Agreement), with respect to the
Collateral, which Intercreditor Agreement may be amended,
supplemented or modified from time to time without the consent
of the Holders of the notes to add additional lenders or other
persons holding Pari Passu Obligations permitted to be incurred
under the indenture, the Intercreditor Agreement and any Pari
Passu Agreements then in effect.
Collateral
Agent
By accepting the notes, each Holder will be deemed to have
irrevocably appointed The Bank of New York Mellon
Trust Company, N.A., as the Collateral Agent, to act as its
agent under the Intercreditor Agreement, the Security Agreement
and the other Security Documents, and to have irrevocably
authorized the Collateral Agent to perform the duties and
exercise the rights powers and discretions that are specifically
given to it under the indenture, the Intercreditor Agreement,
the Security Agreement and the other Security Documents,
together with any other incidental rights power and discretion.
Under the terms of the indenture, the Collateral Agent may
resign on 30 days prior written notice, and the Collateral
Agent may also be removed for cause and replaced by a
replacement collateral agent selected by the Trustee, in
consultation with the Company.
The Collateral Agent will hold (directly or through co-trustees,
co-agents, agents or sub agents), and will be entitled to
enforce, all Liens on the Collateral created by the Security
Documents in accordance with the following.
33
Enforcement
of Security Interests
Under the Intercreditor Agreement, the Applicable Authorized
Representative has the right, under certain circumstances, to
direct the Collateral Agent and each Pari Passu Debt Collateral
Agent to foreclose or take other actions with respect to the
Collateral, and no other party to the Intercreditor Agreement
will have the right to direct any action with respect to the
Collateral. Except as described below, the Applicable Authorized
Representative will be the Authorized Representative of the
Series of Pari Passu Obligations that constitutes the largest
Outstanding Amount of all then outstanding Pari Passu
Obligations (the Controlling Authorized
Representative). Upon the occurrence of the
Non-Controlling Authorized Representative Enforcement Date (as
defined below), the then Applicable Authorized Representative
will be replaced as Applicable Authorized Representative by the
Authorized Representative of the Series of Pari Passu
Obligations that then constitutes the next largest Outstanding
Amount of all then outstanding Pari Passu Obligations with
respect to the Collateral (the Major Non-Controlling
Authorized Representative).
The Non-Controlling Authorized Representative Enforcement
Date, with respect to which a Non-Controlling Authorized
Representative becomes the Applicable Authorized Representative
is the date that is 90 days (throughout which
90-day
period the applicable Non-Controlling Authorized Representative
was the Major Non-Controlling Authorized Representative) after
the occurrence of both (a) an event of default that has
occurred and is continuing, as defined in the indenture or any
other applicable Pari Passu Agreement for that Series of Pari
Passu Obligations, and (b) the Collateral Agents and
each other Authorized Representatives receipt of written
notice from that Authorized Representative certifying that
(i) such Authorized Representative is the Major
Non-Controlling Authorized Representative and that an event of
default, as defined in the indenture or any other Pari Passu
Agreement for that Series of Pari Passu Obligations, has
occurred and is continuing and (ii) the Pari Passu
Obligations of that Series are currently due and payable in full
(whether as a result of acceleration thereof or otherwise) in
accordance with the indenture or other applicable Pari Passu
Agreement, as applicable, for that Series of Pari Passu
Obligations; provided that the Non-Controlling Authorized
Representative Enforcement Date will be stayed and shall not
occur and shall be deemed not to have occurred with respect to
any Collateral if (1) at any time the Applicable Authorized
Representative has commenced and is diligently pursuing any
enforcement action with respect to such Collateral or
(2) at any time the Company or any Subsidiary Guarantor
that has granted a security interest in such Collateral is then
a debtor under or with respect to (or otherwise subject to) any
insolvency or liquidation proceeding. If no such stay occurs, or
is deemed to occur, then the Major Non-Controlling Authorized
Representative will become the Applicable Authorized
Representative from and after the occurrence of the
Non-Controlling Authorized Representative Enforcement Date.
Restrictions
on Enforcement of Priority Liens
Subject to the terms of the Intercreditor Agreement, the
Applicable Authorized Representative will have the sole right to
instruct the Collateral Agent and each Pari Passu Debt
Collateral Agent to act or refrain from acting with respect to
the Collateral, and (a) neither Collateral Agent nor any
Pari Passu Debt Collateral Agent will follow any instructions
(other than certain types of instructions to exercise rights
other than enforcement rights) with respect to the Collateral
from any representative of any Non-Controlling Secured Party or
other Pari Passu Secured Party (other than the Applicable
Authorized Representative), and (b) no Authorized
Representative of any Non-Controlling Secured Party or other
Pari Passu Secured Party (other than the Applicable Authorized
Representative) will instruct the Collateral Agent or any Pari
Passu Debt Collateral Agent to commence any judicial or
non-judicial foreclosure proceedings with respect to, seek to
have a trustee, receiver, liquidator or similar official
appointed for or over, attempt any action to take possession of,
exercise any right, remedy or power with respect to, or
otherwise take any action to enforce its interests in or realize
upon, or take any other action available to it in respect of,
the Collateral.
No representative of any Non-Controlling Secured Party may
contest, protest or object to any foreclosure proceeding or
action brought by or at the direction of the Controlling
Authorized Representative in connection with the Intercreditor
Agreement or the exercise of remedies against the Collateral in
accordance with the terms of the Intercreditor Agreement. Each
Authorized Representative will agree that it will not accept any
Lien on any Collateral for the benefit of any series of Pari
Passu Obligations (other than funds deposited for
34
the discharge or defeasance of the indenture or any Pari Passu
Agreement and other exceptions set forth in the Intercreditor
Agreement) unless each other series of Pari Passu Obligations is
also secured by a Lien on such Collateral. Each of the Pari
Passu Secured Parties will also agree that it will not contest
or support any other person in contesting, in any proceeding
(including any insolvency or liquidation proceeding), the
perfection, priority, validity or enforceability of a Lien held
by or on behalf of any of the Pari Passu Secured Parties in all
or any part of the Collateral, or the provisions of the
Intercreditor Agreement.
None of the Pari Passu Secured Parties may institute any suit or
assert in any suit, bankruptcy, insolvency or other proceeding
any claim against the Collateral Agent or any other Pari Passu
Secured Party seeking damages from or other relief by way of
specific performance, instructions or otherwise with respect to
any Collateral, except to the extent expressly permitted by the
terms of the Intercreditor Agreement. In addition, none of the
Pari Passu Secured Parties may seek to have any Collateral or
any part thereof marshaled upon any foreclosure or other
disposition of such Collateral. If any Pari Passu Secured Party
obtains possession of any Collateral or realizes any proceeds or
payment in respect thereof, at any time prior to the discharge
of each of the Pari Passu Obligations, then it must hold such
Collateral, proceeds or payment in trust for the other Pari
Passu Secured Parties and promptly transfer such Collateral,
proceeds or payment to the Applicable Authorized Representative
to be distributed in accordance with the Intercreditor Agreement.
The Pari Passu Secured Parties acknowledge that the Pari Passu
Obligations may, subject to the limitations set forth in the
indenture, the Security Documents, the applicable Pari Passu
Agreement or Pari Passu Security Documents, as the case may be,
be increased, extended, renewed, replaced, restated,
supplemented, restructured, repaid, refunded, refinanced or
otherwise amended or modified from time to time, all without
affecting the priorities set forth in the Intercreditor
Agreement defining the relative rights of the Pari Passu Secured
Parties; provided that the authorized representative of
the holders of such Pari Passu Obligations, if not a party to
the Intercreditor Agreement, shall have executed a Joinder
Agreement to the Intercreditor Agreement on behalf of the
holders of such Pari Passu Obligations.
Notwithstanding the foregoing, with respect to any Collateral
for which a third party (other than a Pari Passu Secured Party)
has a lien or security interest that is junior in priority to
the security interest of any Series of Pari Passu Obligations
but senior (as determined by appropriate legal proceedings in
the case of any dispute) to the security interest of any other
Series of Pari Passu Obligations (such third party, an
Intervening Creditor), the value of any
Collateral or proceeds which are allocated to such Intervening
Creditor will be deducted on a ratable basis solely from the
Collateral or proceeds to be distributed in respect of the
Series of Pari Passu Obligations with respect to which such
impairment exists. In addition, the Pari Passu Secured Parties
of each Series bear the risk that a court may deem that the Pari
Passu Obligations of such Series (and not of any other Series)
(i) are unenforceable under applicable law, (ii) are
equitably subordinated to any other obligations or (iii) do
not have an enforceable security interest in any of the
Collateral that secures any other Series of Pari Passu
Obligations. In the event of any such impairment, the rights of
the holders of Pari Passu Obligations of the impaired Series
under the Intercreditor Agreement will be modified to the extent
necessary so that the effects of the impairment are borne solely
by such impaired holders and not the holders of any other Series
of Pari Passu Obligations.
Amendment
of Security Documents
The Applicable Authorized Representative may enter into any
amendment to any Pari Passu Security Document, so long as the
Applicable Authorized Representative receives a certificate of
the Company stating that such amendment is permitted by the
terms of the indenture and each Pari Passu Agreement then in
effect. The Applicable Authorized Representative will give
notice to each other Authorized Representative of any release of
Collateral and of any amendment to any Pari Passu Security
Document. The Applicable Authorized Representative may not enter
into any amendment that releases all or substantially all of the
Collateral from the Liens under any Pari Passu Security Document
without the written consent of each Authorized Representative;
provided that, to the extent the release of all or
substantially all of the Collateral from the Liens under the
applicable Pari Passu Security Documents relates solely to one
or more (but not all) Series of Pari Passu Obligations (and such
release is permitted under, and in accordance with, the
indenture, the Security Documents, the Pari Passu Agreement or
Pari Passu Security Documents, as the case may be, applicable to
35
such Series), such release shall not require the prior written
consent of any Authorized Representative of any other Series of
Pari Passu Obligations (it being understood that the Liens
securing such other Series of Pari Passu Obligations shall not
be affected by such release and shall remain in effect).
Use and
Release of Collateral
Subject to the terms of the Security Documents, the Company and
the Subsidiary Guarantors will have the right to remain in
possession and retain exclusive control of the Collateral,
subject to certain exceptions, to freely operate the Collateral
and to collect, invest and dispose of any income thereon. The
indenture requires the Company to comply with
Section 313(b) of the Trust Indenture Act (the
TIA) relating to reports, and
Section 314(d) of the TIA, relating to the release of
property and to the substitution therefor of any property to be
pledged as Collateral for the notes. Any certificate or opinion
required by Section 314(d) of the TIA may be made by an
Officer of the Company except in cases where Section 314(d)
requires that such certificate or opinion be made by an
independent engineer, appraiser or other expert, who shall be
reasonably satisfactory to the Trustee. Notwithstanding anything
to the contrary herein, the Company and the Subsidiary
Guarantors will not be required to comply with all or any
portion of Section 314(d) of the TIA if they determine, in
good faith based on advice of counsel (which may be internal
counsel), that under the terms of that section
and/or any
interpretation or guidance as to the meaning thereof of the SEC
and its staff, including no action letters or
exemptive orders, all or any portion of Section 314(d) of
the TIA is inapplicable to the released Collateral. Without
limiting the generality of the foregoing, certain no-action
letters issued by the SEC have permitted an indenture qualified
under the TIA to contain provisions permitting the release of
collateral from Liens under such indenture in the ordinary
course of the issuers business without requiring the
issuer to provide certificates and other documents under
Section 314(d) of the TIA.
Release of Collateral. The Indenture provides
that the Liens on the Collateral securing the notes will
automatically and without the need for any further action by any
Person be released (and the Collateral Agent will execute and
deliver such documents and instruments as the Company and the
Subsidiary Guarantors may request to evidence such release
without the consent of the Holders):
(1) in whole or in part, as applicable, as to all or any
portion of property subject to such Liens which has been taken
by eminent domain, condemnation or other similar circumstances;
(2) in whole upon:
(a) satisfaction and discharge of the Indenture as set
forth below under Satisfaction and
Discharge; or
(b) a Legal Defeasance or Covenant Defeasance of the
Indenture as described below under
Defeasance;
(3) in part, as to any property that (a) is sold,
transferred or otherwise disposed of by the Company or any
Subsidiary Guarantor (other than to the Company or another
Subsidiary Guarantor) in a transaction not prohibited by the
Indenture at the time of such sale, transfer or disposition or
(b) is owned or at any time acquired by a Subsidiary
Guarantor that has been released from its Subsidiary Guarantee
in accordance with the Indenture, concurrently with the release
of such Subsidiary Guarantee (including in connection with the
designation of a Subsidiary Guarantor as an Unrestricted
Subsidiary); and
(4) in part, in accordance with the applicable provisions
of the Security Documents.
Certain Limitations on the Collateral. The
right of the Collateral Agent to take possession and dispose of
the Collateral following an Event of Default is likely to be
significantly impaired by applicable bankruptcy law if a
bankruptcy proceeding were to be commenced by or against the
Company or the Subsidiary Guarantors prior to the Collateral
Agent having taken possession and disposed of the Collateral.
Under the U.S. Bankruptcy Code, a secured creditor is
prohibited from taking its security from a debtor in a
bankruptcy case, or from disposing of security taken from such
debtor, without bankruptcy court approval. Moreover, the
U.S. Bankruptcy Code permits the debtor in certain
circumstances to continue to retain and to use collateral owned
as of the date of the bankruptcy filing (and the proceeds,
products, offspring, rents or profits of such
36
Collateral) even though the debtor is in default under the
applicable debt instruments provided that the secured
creditor is given adequate protection. The meaning
of the term adequate protection may vary according
to circumstances. In view of the lack of a precise definition of
the term adequate protection and the broad
discretionary powers of a bankruptcy court, it is impossible to
predict how long payments under the notes could be delayed
following commencement of a bankruptcy case, whether or when the
Collateral Agent could repossess or dispose of the Collateral,
or whether or to what extent Holders would be compensated for
any delay in payment or loss of value of the Collateral through
the requirement of adequate protection.
Furthermore, in the event a U.S. bankruptcy court
determines the value of the Collateral (after giving effect to
any prior Liens) is not sufficient to repay all amounts due on
the notes and any other Pari Passu Lien Indebtedness, the
Holders of the notes and such other Pari Passu Lien Indebtedness
would hold secured claims to the extent of the value of the
Collateral, and would hold unsecured claims with respect to any
shortfall. Applicable U.S. bankruptcy laws permit the
payment
and/or
accrual of post-petition interest, costs and attorneys
fees during a debtors bankruptcy case only to the extent
the claims are oversecured or the debtor is solvent at the time
of reorganization. In addition, if the Company or the Subsidiary
Guarantors were to become the subject of a bankruptcy case, the
bankruptcy court, among other things, may avoid certain
prepetition transfers made by the entity that is the subject of
the bankruptcy filing, including, without limitation, transfers
held to be preferences or fraudulent conveyances.
Sinking
Fund
There is no sinking fund payments for the notes.
Governing
Law
The Indenture, the notes, the Intercreditor Agreement and the
Security Agreement are governed by, and construed in accordance
with, the laws of the State of New York.
Covenants
Overview
In the Indenture, the Company agreed to covenants that limit the
ability of the Company and its Restricted Subsidiaries and, in
certain cases, Regulated Subsidiaries, among other things, to:
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incur additional debt and issue Preferred Stock;
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pay dividends, acquire shares of capital stock, make payments on
subordinated debt or make investments;
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place limitations on distributions from Regulated Subsidiaries
or Restricted Subsidiaries;
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issue guarantees;
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sell or exchange assets;
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enter into transactions with shareholders and affiliates;
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create liens; and
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effect mergers.
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Pursuant to the Indenture, the covenants under
Limitation on Indebtedness and Issuances of
Preferred Stock, Limitation on
Restricted Payments, Limitation on
Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries or Regulated Subsidiaries
Future Subsidiary Guarantees,
Limitation on Transactions with Shareholders
and Affiliates, Limitation on
Liens and Limitation on Asset
Sales, apply to the Company and the Restricted
Subsidiaries, but generally do not apply, or apply only in part,
to Regulated Subsidiaries.
37
If a Change of Control occurs, each Holder of notes will have
the right to require the Company to repurchase all or a part of
the Holders notes at a price equal to 101% of their
principal amount, plus any accrued interest and Additional
Interest (if any) to, but not including, the date of repurchase.
Limitation
on Indebtedness and Issuances of Preferred Stock
(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, Incur any Indebtedness, including
Disqualified Stock, and the Company will not permit any
Restricted Subsidiary to issue Preferred Stock; provided
that the Company may Incur Indebtedness, including
Disqualified Stock, any Subsidiary Guarantor may Incur
Indebtedness, including Disqualified Stock, or issue Preferred
Stock if, after giving effect to the Incurrence of such
Indebtedness and the receipt and application of the proceeds
therefrom, the Consolidated Fixed Charge Coverage Ratio would be
greater than 2.0:1.
Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of
the following:
(1) Indebtedness of the Company under any Credit Facility
in an aggregate principal amount at any one time outstanding
(with letters of credit, without duplication, being deemed to
have a principal amount equal to the face amount and outstanding
reimbursement amount thereunder) not to exceed
$30.0 million;
(2) Indebtedness represented by the notes and the related
Subsidiary Guarantees to be issued on the date of the indenture
and the exchange notes and the related Subsidiary Guarantees to
be issued pursuant to the registration rights agreement and
exchange notes and related Subsidiary Guarantees issued in
exchange for Additional Notes issued under the Indenture;
(3) Indebtedness of Company and its Restricted Subsidiaries
existing on the Closing Date;
(4) purchase money Indebtedness (including Capitalized
Lease Obligations) incurred after the Closing Date to acquire
equipment or real property in the ordinary course of business;
provided that (A) the aggregate amount of all such
Indebtedness at any time outstanding does not exceed the greater
of (i) $20.0 million or (ii) 5% of Consolidated
Net Worth and (B) such Indebtedness is issued within
365 days after the acquisition of the asset financed;
(5) Indebtedness owed (A) to the Company or any
Subsidiary Guarantor evidenced by an unsubordinated promissory
note or (B) to any Restricted Subsidiary or Regulated
Subsidiary; provided that (x) any event which
results in any such Restricted Subsidiary or Regulated
Subsidiary ceasing to be a Restricted Subsidiary or Regulated
Subsidiary or any subsequent transfer of such Indebtedness
(other than to the Company or another Restricted Subsidiary or
Regulated Subsidiary) shall be deemed, in each case, to
constitute an Incurrence of such Indebtedness not permitted by
this clause (5) and (y) if the Company (or any
Subsidiary that is a Subsidiary Guarantor at the time such
Indebtedness is Incurred) is the obligor on such Indebtedness,
such Indebtedness must be expressly contractually subordinated
in right of payment to the notes, in the case of the Company, or
the Subsidiary Guarantee, in the case of a Subsidiary Guarantor;
(6) Indebtedness issued in exchange for, or the net
proceeds of which are used to refinance or refund, then
outstanding Indebtedness (other than Indebtedness outstanding
under clause (1) or (5)) and any refinancings thereof in an
amount up to the amount so refinanced or refunded (plus premiums
(including tender premiums), accrued interest, Additional
Interest, fees and expenses); provided that
(a) Indebtedness the proceeds of which are used to
refinance or refund the notes or Indebtedness that is
subordinated in right of payment to, the notes or a Subsidiary
Guarantee shall only be permitted under this clause (6) if
such new Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such new Indebtedness
is issued or remains outstanding, is expressly made subordinate
in right of payment to the notes or the Subsidiary Guarantee at
least to the extent that the Indebtedness to be refinanced is
subordinated to the notes or the Subsidiary Guarantee,
(b) such new Indebtedness, determined as of the date of
Incurrence of such new Indebtedness, does not mature prior to
the Stated Maturity of the Indebtedness to be refinanced or
refunded, and the Average Life of such new Indebtedness is at
least equal to the remaining Average Life of the Indebtedness to
be refinanced or refunded and
38
(c) such new Indebtedness is Incurred by the Company or a
Subsidiary Guarantor or by the Restricted Subsidiary that is the
obligor on the Indebtedness to be refinanced or refunded;
(7) the guarantee by the Company or any of the Subsidiary
Guarantors of Indebtedness of the Company or any of its
Restricted Subsidiaries that was permitted to be incurred by
another provision of this Limitation on Indebtedness and
Issuances of Preferred Stock covenant;
(8) Indebtedness, Disqualified Stock or Preferred Stock of
(x) the Company or any of the Restricted Subsidiaries
Incurred to finance an acquisition or (y) Persons that are
acquired by the Company or any of the Restricted Subsidiaries or
merged or amalgamated with or into the Company or a Restricted
Subsidiary in accordance with the terms of the Indenture;
provided, however, that after giving effect to
such acquisition, merger or amalgamation and the Incurrence of
such Indebtedness either:
(i) the Company would be permitted to Incur at least $1.00
of additional Indebtedness pursuant to the Consolidated Fixed
Charge Coverage Ratio test set forth in the first sentence of
this covenant; or
(ii) the Consolidated Fixed Charge Coverage Ratio of the
Company would be equal to or greater than immediately prior to
such acquisition, merger or amalgamation;
(9) Indebtedness issued by the Company or a Restricted
Subsidiary to current or former officers, directors and
employees thereof or any direct or indirect parent thereof, or
their respective estates, spouses or former spouses, in each
case to finance the purchase or redemption of Capital Stock of
the Company to the extent permitted under clause (8) of the
fourth paragraph of the covenant described under
Limitation on Restricted Payments,
provided that such Indebtedness does not exceed
$30.0 million;
(10) Indebtedness of the Company or any Restricted
Subsidiary supported by a letter of credit or bank guarantee
issued pursuant to a Credit Facility incurred pursuant to
clause (1) above, in a principal amount not in excess of
the stated amount of such letter of credit or bank guarantee;
(11) Indebtedness of Foreign Subsidiaries in an aggregate
amount at any time outstanding not to exceed
$5.0 million; and
(12) Indebtedness not otherwise permitted hereunder, not to
exceed $50.0 million in the aggregate for the Company and
its Restricted Subsidiaries.
(b) Notwithstanding any other provision of this
Limitation on Indebtedness and Issuances of Preferred
Stock covenant, the maximum amount of Indebtedness that
may be Incurred pursuant to this Limitation on
Indebtedness and Issuances of Preferred Stock covenant
will not be deemed to be exceeded, with respect to any
outstanding Indebtedness due solely to the result of
fluctuations in the exchange rates of currencies or due to
fluctuations in the value of commodities or securities which
underlie such Indebtedness. For the purposes of determining
compliance with any restriction on the Incurrence of
Indebtedness (x), the U.S. dollar equivalent principal
amount of any Indebtedness denominated in a foreign currency
shall be calculated based on the relevant currency exchange rate
in effect on the date such Indebtedness was Incurred, in the
case of term debt, or first committed, in the case of revolving
credit debt and (y) the principal amount of any
Indebtedness which is calculated by reference to any underlying
security or commodity shall be calculated based on the relevant
closing price of such commodity or security on the date such
Indebtedness was Incurred.
(c) For purposes of determining any particular amount of
Indebtedness under this Limitation on Indebtedness and
Issuances of Preferred Stock covenant,
(x) Guarantees, Liens or obligations with respect to
letters of credit supporting Indebtedness otherwise included in
the determination of such particular amount shall not be
included and (y) any Liens granted pursuant to the equal
and ratable provisions referred to in the Limitation on
Liens covenant shall not be treated as Indebtedness. For
purposes of determining compliance with this Limitation on
Indebtedness and Issuances of Preferred Stock covenant, if
an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described above, including under the
first paragraph of part (a), the Company, in its sole
discretion, shall classify, and from time to time may
reclassify, such item of Indebtedness.
39
(d) Neither the Company nor any Subsidiary Guarantor will
Incur any Indebtedness if such Indebtedness is subordinate in
right of payment to any other Indebtedness unless such
Indebtedness is also subordinate in right of payment to the
notes or the applicable Subsidiary Guarantee to the same extent.
(e) The Company will not permit any Regulated Subsidiary
(x) to Incur any Indebtedness the proceeds of which are not
invested in the business of such Regulated Subsidiary (or any
Subsidiary of such Regulated Subsidiary which is also a
Regulated Subsidiary), and (y) to Incur any Indebtedness
for the purpose, directly or indirectly, of dividending or
distributing the proceeds of such Indebtedness to the Company or
any Restricted Subsidiary; except that the Incurrence of
Indebtedness by a Regulated Subsidiary that does not comply with
(x) and (y) above shall be permitted provided
that such Incurrence complies with paragraph (a) of
this Limitation on Indebtedness and Issuances
of Preferred Stock covenant as if such paragraph applied
to such Regulated Subsidiary.
Limitation
on Restricted Payments
(a) The Company will not, and will not permit any
Restricted Subsidiary or Regulated Subsidiary to, directly or
indirectly,
(1) declare or pay any dividend or make any distribution on
or with respect to its Capital Stock held by Persons other than
the Company or any of its Restricted Subsidiaries or Regulated
Subsidiaries (other than (w) dividends or distributions
payable solely in shares of its Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to
acquire shares of such Capital Stock, (x) pro rata
dividends or distributions on Common Stock of Restricted
Subsidiaries or Regulated Subsidiaries held by minority
stockholders and (y) dividends or distributions on
non-voting Preferred Stock the proceeds from the sale of which
were invested in the business of such Subsidiary (or any
Subsidiary of such Subsidiary);
(2) purchase, call for redemption or redeem, retire or
otherwise acquire for value any shares of Capital Stock of the
Company or any Restricted Subsidiary or Regulated Subsidiary
(including options, warrants or other rights to acquire such
shares of Capital Stock) held by any Person (other than the
Company, any Restricted Subsidiary or any Regulated Subsidiary);
(3) make any voluntary or optional principal payment, or
voluntary or optional redemption, repurchase, defeasance, or
other acquisition or retirement for value, of Indebtedness of
the Company that is subordinated in right of payment to the
notes or any Indebtedness of a Subsidiary Guarantor that is
subordinated in right of payment to a Subsidiary Guarantee
(other than the payment, redemption, repurchase, defeasance,
acquisition or retirement of (a) Indebtedness of the
Company that is subordinated in right of payment to the notes or
any Indebtedness of a Subsidiary Guarantor that is subordinated
in right of payment to a Subsidiary Guarantee in anticipation of
satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of
such payment, redemption, repurchase, defeasance, acquisition or
retirement and (b) Indebtedness permitted under
clause (5) of the second paragraph of the covenant
described under Limitation on Indebtedness and
Issuances of Preferred Stock); or
(4) with respect to the Company and any Restricted
Subsidiary only, make any Investment, other than a Permitted
Investment, in any Person, and
(b) with respect to any Regulated Subsidiary, make any
Investment in an Unrestricted Subsidiary (such payments or any
other actions described in clauses (a)(1) through (a)(4) above
and this clause (b) being collectively Restricted
Payments);
if, at the time of, and after giving effect to, the
proposed Restricted Payment:
(A) a Default or Event of Default shall have occurred and
be continuing;
(B) the Company could not Incur at least $1.00 of
Indebtedness under the first paragraph of part (a) of the
Limitation on Indebtedness and Issuances of Preferred
Stock covenant;
40
(C) the subsidiary subject to the Restricted Payment, if
any, is a Regulated Subsidiary that is not in compliance with
applicable regulatory capital or other material requirements of
its regulators, such as the SEC, the CFTC, or any applicable
state, federal or self regulatory organization, or would fail to
be in compliance with applicable regulatory requirements as a
consequence of the payment; or
(D) the aggregate amount of all Restricted Payments made
after the Closing Date shall exceed the sum of
(1) 50% of the aggregate amount of the Adjusted
Consolidated Net Income (or, if the Adjusted Consolidated Net
Income is a loss, minus 100% of the amount of such loss) accrued
on a cumulative basis during the period (taken as one accounting
period) beginning on the first day of the fiscal quarter in
which the Closing Date falls and ending on the last day of such
fiscal quarter preceding the Transaction Date for which internal
financial statements are available plus
(2) the aggregate Net Cash Proceeds received by the Company
after the Closing Date as a capital contribution or from the
issuance and sale of its Capital Stock (other than Disqualified
Stock) to a Person who is not a Subsidiary of the Company,
including an issuance or sale permitted by the Indenture of
Indebtedness of the Company for cash subsequent to the Closing
Date upon the conversion of such Indebtedness into Capital Stock
(other than Disqualified Stock) of the Company, or from the
issuance to a Person who is not a Subsidiary of the Company of
any options, warrants or other rights to acquire Capital Stock
of the Company (in each case, exclusive of any Disqualified
Stock or any options, warrants or other rights that are
redeemable at the option of the holder, or are required to be
redeemed, prior to the Stated Maturity of the notes) plus
(3) an amount equal to the return on any Investment
previously made as a Restricted Payment after the Issue Date
(including any such return from repayments of principal on
Indebtedness, dividends, or other transfers of assets, in each
case to the Company or any Restricted Subsidiary or Regulated
Subsidiary or from the Net Cash Proceeds from the sale of any
such Investment (except, in each case, to the extent any such
payment or proceeds are included in the calculation of Adjusted
Consolidated Net Income)), from the release of any Guarantee or
from redesignations of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition
of Investments), not to exceed, in each case,
the amount of Restricted Investments previously made or deemed
made by the Company or any Restricted Subsidiary or Regulated
Subsidiary in such Person or Unrestricted Subsidiary after the
Issue Date.
(c) The foregoing provision shall not be violated by reason
of:
(1) the payment of any dividend or redemption of any
Capital Stock or redemption of the Indebtedness of the Company
that is subordinated in right of payment within 60 days
after the related date of declaration or call for redemption if,
at said date of declaration or call for redemption, such payment
or redemption would have complied with the provisions of the
Indenture;
(2) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Indebtedness that is
subordinated in right of payment to the notes or any Subsidiary
Guarantee including premiums (including tender premiums),
accrued interest, Additional Interest, fees and expenses, with
the proceeds of, or in exchange for, Indebtedness Incurred under
clause (5) of the second paragraph of part (a) of the
Limitation on Indebtedness and Issuances of Preferred
Stock covenant;
(3) the repurchase, redemption or other acquisition of
Capital Stock of the Company, a Subsidiary Guarantor, a
Restricted Subsidiary or a Regulated Subsidiary (or options,
warrants or other rights to acquire such Capital Stock) or a
dividend on such Capital Stock in exchange for, or out of the
proceeds of a capital contribution or a substantially concurrent
offering of, shares of Capital Stock (other than Disqualified
Stock) of the Company (or options, warrants or other rights to
acquire such Capital Stock); provided that such options,
warrants or other rights are not redeemable at the option of the
holder, or required to be redeemed, in each case other than in
connection with a Change of Control of the Company (provided
that prior to any such repurchase, redemption or other
acquisition in connection with a Change of Control, the Company
has made an Offer to Purchase and purchased all notes validly
tendered for
41
payment in accordance with the Repurchase of the Notes
Upon a Change of Control covenant), prior to the Stated
Maturity of the notes;
(4) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for
value of Indebtedness which is subordinated in right of payment
to the notes or any Subsidiary Guarantee in exchange for, or out
of the proceeds of a capital contribution or a substantially
concurrent offering of, shares of the Capital Stock (other than
Disqualified Stock) of the Company (or options, warrants or
other rights to acquire such Capital Stock); provided
that such options, warrants or other rights are not
redeemable at the option of the holder, or required to be
redeemed, in each case other than in connection with a Change of
Control of the Company (provided that prior to any such
repurchase, redemption or other acquisition in connection with a
Change of Control, the Company has made an Offer to Purchase and
purchased all notes validly tendered for payment in accordance
with the Repurchase of the Notes Upon a Change of
Control covenant), prior to the Stated Maturity of the
notes;
(5) payments or distributions to dissenting stockholders
pursuant to applicable law, pursuant to or in connection with a
consolidation, merger or transfer of assets of the Company, any
Restricted Subsidiary or any Regulated Subsidiary and that, in
the case of the Company, comply with the provisions of the
Indenture applicable to mergers, consolidations and transfers of
all or substantially all of the property and assets of the
Company;
(6) Investments acquired as a capital contribution to, or
in exchange for, or out of the proceeds of a substantially
concurrent offering of, Capital Stock (other than Disqualified
Stock) of the Company;
(7) repurchases of Capital Stock deemed to occur upon
exercise of stock options or warrants if such Capital Stock
represent a portion of the exercise price of such options or
warrants and repurchases of Capital Stock or options to purchase
Capital Stock in connection with the exercise of stock options
to the extent necessary to pay applicable withholding taxes;
(8) the repurchase, redemption or other acquisition of the
Companys Capital Stock (or options, warrants or other
rights to acquire such Capital Stock) from Persons who are or
were formerly officers, directors or employees of the Company
and their Affiliates, heirs and executors; provided,
however, that the aggregate amounts paid under this
clause (8) do not exceed $5.0 million in any calendar
year (with unused amounts in any calendar year being permitted
to be carried over for the three succeeding calendar years
subject to a maximum payment (without giving effect to the
following proviso) of $15.0 million in any calendar year);
provided, further, however, that such
amount in any calendar year may be increased by an amount not to
exceed:
(i) the cash proceeds received by the Company or any of the
Restricted Subsidiaries or Regulated Subsidiaries from the sale
of Capital Stock (other than Disqualified Stock) of the Company
to members of management, directors or consultants of the
Company and the Restricted Subsidiaries and Regulated
Subsidiaries that occurs after the Closing Date; plus
(ii) the cash proceeds of key man life insurance policies
received by the Company or any direct or indirect parent of the
Company (to the extent contributed to the Company) or the
Restricted Subsidiaries after the Issue Date; less
(iii) the amount of any Restricted Payments previously made
pursuant to subclauses (i) and (ii) of this second
proviso of clause (8);
provided that the Company may elect to apply all or any
portion of the aggregate increase contemplated by
subclauses (i) and (ii) above in any calendar year;
(9) the repurchase of Common Stock of the Company, or the
declaration or payment of dividends on Common Stock (other than
Disqualified Stock) of the Company; provided that the
aggregate amount of all such declarations, payments or
repurchases pursuant to this clause (9) shall not exceed
$15.0 million in any fiscal year;
42
(10) the declaration and payment of dividends or
distributions to holders of any class or series of Disqualified
Stock of the Company or any of the Restricted Subsidiaries
issued or Incurred in accordance with the covenant described
under Limitation on Indebtedness and Issuances
of Preferred Stock, but only to the extent that such
dividend or distribution is included in the determination of
Consolidated Fixed Charges for such period;
(11) the repurchase, redemption or other acquisition or
retirement for value of any Indebtedness subordinated in right
of payment to the notes required pursuant to the provisions
similar to those described under the captions Change of
Control and Asset Sales; provided there
is a concurrent or prior made offer made to Holders of the notes
and all notes tendered by Holders of the notes in connection
with such offer, as applicable, have been repurchased, redeemed
or acquired for value.
(12) Restricted Payments by the Company or any Restricted
Subsidiary to allow the payment of cash in lieu of the issuance
of fractional shares upon the exercise of options or warrants or
upon the conversion or exchange of Capital Stock or debt
securities that are convertible into, or exchangeable for,
Capital Stock of any such Person;
(13) the repurchase, redemption or other acquisition of
Oppenheimer Multifamily & Housing Healthcare Finance,
Inc.s Capital Stock (or options, warrants or other rights
to acquire such Capital Stock) by the Company or any of its
Subsidiaries; or
(14) other Restricted Payments in an aggregate amount taken
together with all other Restricted Payments made pursuant to
this clause (14) not to exceed $10.0 million;
provided, however, that at the time of, and after
giving effect to, any Restricted Payment permitted under clauses
(9), (10) or (14), no Default shall have occurred and be
continuing or would occur as a consequence thereof.
(d) Each Restricted Payment permitted pursuant to the
preceding paragraph (other than a Restricted Payment referred to
in clauses (2) and (12) thereof, an exchange of
Capital Stock for Capital Stock or Indebtedness referred to in
clause (3) or (4) thereof, an Investment acquired as a
capital contribution or in exchange for Capital Stock referred
to in clause (6) thereof, the repurchase of Capital Stock
referred to in clause (7) thereof, the repurchase of Common
Stock referred to in clause (9) thereof), and the Net Cash
Proceeds from any issuance of Capital Stock referred to in
clause (3), (4) or (6), shall be included in calculating
whether the conditions of clause (D) of the first paragraph
of this Limitation on Restricted Payments covenant
have been met with respect to any subsequent Restricted Payments.
(e) For purposes of determining compliance with this
Limitation on Restricted Payments covenant,
(x) the amount, if other than in cash, of any Restricted
Payment shall be shall be determined in good faith by the
Company, and (1) in the case of property with a fair market
value in excess of $5.0 million, shall be set forth in an
Officers Certificate or (2) in the case of property
with a fair market value in excess of $20.0 million, shall
be set forth in a resolution approved by at least a majority of
the Board of Directors of the Company and (y) if a
Restricted Payment meets the criteria of more than one of the
types of Restricted Payments described in the above clauses,
including the first paragraph of this Limitation on
Restricted Payments covenant, the Company, in its sole
discretion, may order and classify, and from time to time may
reclassify, such Restricted Payment if it would have been
permitted at the time such Restricted Payment was made and at
the time of such reclassification.
Limitation
on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries or Regulated Subsidiaries
The Company will not, and will not permit any Restricted
Subsidiary or Regulated Subsidiary to, create or otherwise cause
or suffer to exist or become effective any consensual
encumbrance or restriction of any
43
kind on the ability of any Restricted Subsidiary or Regulated
Subsidiary (other than any Subsidiary Guarantor) to:
(1) pay dividends or make any other distributions permitted
by applicable law on any Capital Stock of such Restricted
Subsidiary or Regulated Subsidiary owned by the Company or any
other Restricted Subsidiary or Regulated Subsidiary;
(2) pay any Indebtedness owed to the Company or any other
Restricted Subsidiary or Regulated Subsidiary;
(3) make loans or advances to the Company or any other
Restricted Subsidiary or Regulated Subsidiary; or
(4) transfer any of its property or assets to the Company
or any other Restricted Subsidiary or Regulated Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions:
(1) existing on the Closing Date, the Indenture or any
other indentures or agreements in effect on the Closing Date,
and any amendments, supplements, extensions, refinancings,
renewals or replacements of such indentures or agreements;
provided that the encumbrances and restrictions in any
such amendments, supplements, extensions, refinancings, renewals
or replacements taken as a whole are no less favorable in any
material respect to the Holders (as determined in good faith by
Senior Management or the Board of Directors of the Company) than
those encumbrances or restrictions that are then in effect and
that are being amended, supplemented, extended, refinanced,
renewed or replaced;
(2) existing under or by reason of applicable law, rule,
regulation or order, including rules and regulations of and
agreements with any regulatory authority having jurisdiction
over the Company, any Restricted Subsidiary, or any Regulated
Subsidiary, including, but not limited to the SEC, the CFTC and
any self regulatory organization of which such Regulated
Subsidiary is a member, or the imposition of conditions or
requirements pursuant to the enforcement authority of any such
regulatory authority;
(3) existing (i) with respect to any Person or the
property or assets of such Person acquired by the Company or any
Restricted Subsidiary or any Regulated Subsidiary, existing at
the time of such acquisition and not incurred in contemplation
thereof or (ii) with respect to any Unrestricted Subsidiary
at the time it is designated or is deemed to become a Restricted
Subsidiary, which encumbrances or restrictions are not
applicable to any Person or the property or assets of any Person
other than such Person or the property or assets of such Person
so acquired or designated, as the case may be, and any
amendments, supplements, extensions, refinancings, renewals or
replacements of thereof; provided that the encumbrances
and restrictions in any such amendments, supplements,
extensions, refinancings, renewals or replacements taken as a
whole are no less favorable in any material respect to the
Holders (as determined in good faith by Senior Management or the
Board of Directors of the Company) than those encumbrances or
restrictions that are then in effect and that are being amended,
supplemented, extended, refinanced, renewed or replaced;
(4) in the case of clause (4) of the first paragraph
of this Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries or Regulated
Subsidiaries covenant:
(A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease,
license, conveyance or contract or similar property or asset;
(B) existing by virtue of any transfer of, agreement to
transfer, option or right with respect to, or Lien on, any
property or assets of the Company, any Restricted Subsidiary or
any Regulated Subsidiary not otherwise prohibited by the
Indenture; or
(C) arising or agreed to in the ordinary course of
business, not relating to any Indebtedness, and that do not,
individually or in the aggregate, detract from the value of
property or assets of the Company or any Restricted Subsidiary
or Regulated Subsidiary in any manner material to the Company or
any Restricted Subsidiary or Regulated Subsidiary taken as a
whole;
44
(5) with respect to a Restricted Subsidiary or Regulated
Subsidiary and imposed pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially
all of the Capital Stock of, or property and assets of, such
Restricted Subsidiary or Regulated Subsidiary;
(6) customary provisions in joint venture agreements and
other similar agreements, relating solely to the relevant joint
venture or other similar arrangement;
(7) restrictions on cash or other deposits imposed by
customers under contracts entered into in the ordinary course of
business;
(8) restrictions in other Indebtedness, Disqualified Stock
or Preferred Stock of a Foreign Subsidiary permitted to be
incurred subsequent to the Closing Date pursuant to
clause (11) of the covenant described under
Limitation on Indebtedness and Issuance of Preferred
Stock that are imposed solely on the Foreign Subsidiary
party thereto; and
(9) customary financial covenants, minimum net worth
requirements or collateral coverage requirements in Securities
Facilities that in the reasonable judgment of the Company do not
impair its ability to comply with its obligations with respect
to the notes.
Nothing contained in this Limitation on Dividend and Other
Payment Restrictions Affecting Restricted Subsidiaries or
Regulated Subsidiaries covenant shall prevent the Company,
any Restricted Subsidiary or any Regulated Subsidiary from
(1) creating, incurring, assuming or suffering to exist any
Liens otherwise permitted in the Limitation on Liens
covenant or (2) restricting the sale or other disposition
of property or assets of the Company or any of its Restricted
Subsidiaries or Regulated Subsidiaries that secure Indebtedness
of the Company or any of its Restricted Subsidiaries or
Regulated Subsidiaries.
For purposes of determining compliance with this covenant,
(1) the priority of any Preferred Stock in receiving
dividends or liquidating distributions prior to dividends or
liquidating distributions being paid on Common Stock shall not
be deemed a restriction on the ability to make distributions on
Capital Stock and (2) the subordination of loans or
advances made to the Company or a Restricted Subsidiary to other
Indebtedness Incurred by the Company or any such Restricted
Subsidiary shall not be deemed a restriction on the ability to
make loans or advances.
Future
Subsidiary Guarantees
The Company will not permit any Restricted Subsidiary that is
not a Subsidiary Guarantor, directly or indirectly, to Guarantee
any Indebtedness (Guaranteed Indebtedness) of
the Company or any Restricted Subsidiary (other than a Foreign
Subsidiary), unless (a) such Restricted Subsidiary, to the
extent permitted by law, simultaneously executes and delivers a
Subsidiary Guarantee, becomes a party to the applicable Security
Documents and, to the extent required by the Security Agreement,
promptly executes and delivers such security instruments,
financing statements and certificates as may be necessary to
vest in the Collateral Agent a perfected first priority security
interest on a pari passu basis with the Liens securing any Pari
Passu Lien Indebtedness (subject to Permitted Liens) in
properties and assets that constitute Collateral as security for
the notes or the Subsidiary Guarantees and as may be necessary
to have such property or asset added to the applicable
Collateral as required under the Security Documents and the
Indenture, and thereupon all provisions of the Indenture
relating to the Collateral shall be deemed to relate to such
properties and assets to the same extent and with the same force
and effect and (b) such Restricted Subsidiary waives and
will not in any manner whatsoever claim or take the benefit or
advantage of, any rights of reimbursement, indemnity or
subrogation or any other rights against the Company or any other
Restricted Subsidiary as a result of any payment by such
Restricted Subsidiary under its Subsidiary Guarantee until the
notes have been paid in full. The obligations of any such future
Subsidiary Guarantor will be limited so as not to constitute a
fraudulent conveyance or fraudulent transfer under applicable
federal or state laws.
If the Guaranteed Indebtedness is (A) pari passu in right
of payment with the notes or any Subsidiary Guarantee, then the
Guarantee of such Guaranteed Indebtedness shall be pari passu in
right of payment with, or subordinated to, the Subsidiary
Guarantee or (B) subordinated in right of payment to the
notes or any Subsidiary Guarantee, then the Guarantee of such
Guaranteed Indebtedness shall be subordinated in right of
45
payment to the Subsidiary Guarantee at least to the extent that
the Guaranteed Indebtedness is subordinated to the notes or the
Subsidiary Guarantee.
Notwithstanding the foregoing, any future Subsidiary Guarantee
by a Restricted Subsidiary may provide by its terms that it
shall be automatically and unconditionally released and
discharged:
(1) as set forth under Subsidiary
Guarantees; or
(2) upon the release or discharge of the Guarantee which
resulted in the creation of such Subsidiary Guarantee, except a
discharge or release by or as a result of payment under such
Guarantee.
Limitation
on Transactions with Shareholders and Affiliates
The Company will not, and will not permit any Restricted
Subsidiary or Regulated Subsidiary to, directly or indirectly,
enter into, renew or extend any transaction (including, without
limitation, the purchase, sale, lease or exchange of property or
assets, or the rendering of any service) with any Affiliate of
the Company or any Affiliates of any Restricted Subsidiary or
Regulated Subsidiary, except (1) upon fair and reasonable
terms not materially less favorable to the Company or such
Restricted Subsidiary or Regulated Subsidiary than could be
obtained, at the time of such transaction or, if such
transaction is pursuant to a written agreement, at the time of
the execution of the agreement providing therefor, in a
comparable arms-length transaction with a Person that is
not an Affiliate and (2) if the transaction involves
aggregate consideration in excess of $20.0 million, the
Company delivers to the Trustee a resolution adopted in good
faith by the majority of the Board of Directors of the Company
approving such transaction and set forth in an Officers
Certificate certifying that such transaction complies with
clause (1) above.
The foregoing limitation does not limit, and shall not apply to:
(1) transactions (A) approved by a majority of the
disinterested members of the Board of Directors or (B) for
which the Company, a Restricted Subsidiary or a Regulated
Subsidiary delivers to the Trustee a written opinion of a
nationally recognized investment banking, accounting, valuation
or appraisal firm stating that the transaction is fair to the
Company or such Restricted Subsidiary or Regulated Subsidiary
from a financial point of view;
(2) any transaction solely among the Company, its
Restricted Subsidiaries or its Regulated Subsidiaries or any
combination thereof;
(3) transactions or payments pursuant to any employee,
officer or director compensation or benefit plans, employment
agreements, indemnification agreements or any similar
arrangements entered into in the ordinary course of business or
approved in good faith by the Board of Directors of the Company;
(4) any payments or other transactions pursuant to any
tax-sharing agreement between the Company and any other Person
with which the Company files a consolidated tax return or with
which the Company is part of a consolidated group for tax
purposes;
(5) any sale of shares of Capital Stock (other than
Disqualified Stock) of the Company;
(6) the granting or performance of registration rights
under a written agreement and approved by the Board of Directors
of the Company, containing customary terms, taken as a whole;
(7) loans to an Affiliate who is an officer, director or
employee of the Company, a Restricted Subsidiary or a Regulated
Subsidiary by a Regulated Subsidiary in the ordinary course of
business in accordance with Sections 7 and 13(k) of the
Exchange Act;
(8) brokerage products and services typically offered to
our customers on substantially the same terms and conditions as
those offered to our customers;
(9) any Permitted Investments or any Restricted Payments
not prohibited by the Limitation on Restricted
Payments covenant;
46
(10) any agreement as in effect as of the Closing Date, or
any amendment thereto (so long as any such amendment, taken as a
whole, is not materially less favorable to the Company, the
Restricted Subsidiaries and Regulated Subsidiaries, as
applicable than the agreement in effect on the date of the
Indenture (as determined by the Board of Directors of the
Company in good faith));
(11) transactions in the ordinary course with entities in
which the Company or a Subsidiary of the Company is the general
partner or managing member pursuant to Investments contemplated
by paragraph 16 of the definition of Permitted Investments;
(12) transactions with a Person (other than an Unrestricted
Subsidiary of the Company) that is an Affiliate of the Company
solely because the Company owns, directly or through a
Restricted Subsidiary, Capital Stock in, or controls, such
Person; or
(13) pledges of Equity Interests of Unrestricted
Subsidiaries.
Limitation
on Liens
The Company will not, and will not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or
suffer to exist or become effective any Lien of any kind on any
asset now owned or hereafter acquired, except (x) Permitted
Liens and (y) any other Lien on any asset or property that
is not required to constitute Collateral if the notes and
Subsidiary Guarantees are equally and ratably secured with (or
on a senior basis to, if such Lien in this clause (y)
secures any Indebtedness that is subordinated in right of
payment to the notes or such Subsidiary Guarantee) the
Obligations secured by such Lien.
Any Lien created for the benefit of the Holders of the notes
pursuant to clause (y) of the preceding paragraph shall
provide by its terms that such Lien shall be automatically and
unconditionally released and discharged upon the release and
discharge of the initial Lien which release and discharge in the
case of any sale of any such asset or property shall not affect
any Lien that the trustee may have on the proceeds from such
sale.
Limitation
on Asset Sales
The Company will not, and will not permit any Restricted
Subsidiary to, consummate any Asset Sale, unless (1) the
consideration received by the Company or such Restricted
Subsidiary is at least equal to the fair market value of the
assets sold or disposed of, (2) at least 75% of the
consideration received consists of (a) Cash or Temporary
Cash Investments, (b) Replacement Assets or (c) to the
extent that any consideration received by the Company or any
Restricted Subsidiary in such Asset Sale constitutes securities
or other assets that are of a type or class that constitutes
Collateral, such securities or other assets are added to the
Collateral securing the notes in the manner and to the extent
required by the Indenture or any of the Security Documents;
provided that the amount of:
(x) any liabilities (as shown on the Companys or such
Restricted Subsidiarys most recent balance sheet or in the
notes thereto) of the Company or any Restricted Subsidiary
(other than liabilities that are by their terms subordinated to
the notes or any Subsidiary Guarantee) (i) that are assumed
by the transferee of any such assets and from which the Company
and all of its Restricted Subsidiaries have been validly
released by all creditors in writing or (ii) in respect of
which neither the Company nor any Restricted Subsidiary
following such Asset Sale has any obligation,
(y) any notes or other obligations or other securities or
assets received by the Company or such Restricted Subsidiary
from such transferee that are converted by the Company or such
Restricted Subsidiary into cash within 180 days of the
receipt thereof (to the extent of the cash received), and
(z) any Designated Non-cash Consideration received by the
Company or any of the Restricted Subsidiaries in such Asset Sale
having an aggregate fair market value, taken together with all
other Designated Non-cash Consideration received pursuant to
this clause (z) that is at that time outstanding, not to
exceed the greater of 1.0% of Total Assets and
$25.0 million at the time of the receipt of such Designated
Non-cash Consideration (with the fair market value of each item
of Designated Non-cash
47
Consideration being measured at the time received and without
giving effect to subsequent changes in value),
shall be deemed to be Temporary Cash Investments for the
purposes of this provision.
The Company will not, and will not permit any Restricted
Subsidiary or Regulated Subsidiary to, consummate any Regulated
Sale, unless (1) the consideration received by the Company,
such Restricted Subsidiary or such Regulated Subsidiary is at
least equal to the fair market value of the assets sold or
disposed of, (2) at least 75% of the consideration received
consists of (a) Cash or Temporary Cash Investments or
(b) Replacement Assets; provided that the amount of:
(x) any liabilities (as shown on the Companys, such
Restricted Subsidiarys or such Regulated Subsidiarys
most recent balance sheet or in the notes thereto) of the
Company, any Restricted Subsidiary or any Regulated Subsidiary
(other than liabilities that are by their terms subordinated to
the notes or any Subsidiary Guarantee) (i) that are assumed
by the transferee of any such assets and from which the Company,
all of its Restricted Subsidiaries and all of its Regulated
Subsidiaries have been validly released by all creditors in
writing or (ii) in respect of which neither the Company nor
any Restricted Subsidiary or Regulated Subsidiary following such
Asset Sale has any obligation,
(y) any notes or other obligations or other securities or
assets received by the Company, such Restricted Subsidiary or
such Regulated Subsidiary from such transferee that are
converted by the Company, such Restricted Subsidiary or
Regulated Subsidiary into cash within 180 days of the
receipt thereof (to the extent of the cash received), and
(z) any Designated Non-cash Consideration received by the
Company, any of its Restricted Subsidiaries or any of its
Regulated Subsidiaries in such Asset Sale having an aggregate
fair market value, taken together with all other Designated
Non-cash Consideration received pursuant to this clause (z)
that is at that time outstanding, not to exceed the greater of
1.0% of Total Assets and $25.0 million at the time of the
receipt of such Designated Non-cash Consideration (with the fair
market value of each item of Designated Non-cash Consideration
being measured at the time received and without giving effect to
subsequent changes in value),
shall be deemed to the Temporary Cash Investments for the
purposes of this provision.
The Company shall or shall cause the relevant Restricted
Subsidiary or Regulated Subsidiary to:
(1) within twelve months after receipt of such Net Cash
Proceeds,
(A) apply an amount equal to such excess Net Cash Proceeds
(i) to the extent such Net Cash Proceeds are from Asset
Sales of Collateral, to permanently repay, repurchase (and
retire) or redeem the notes or Pari Passu Lien Indebtedness and
(ii) to the extent such Net Cash Proceeds are not from
Asset Sales or Regulated Sales of Collateral, to permanently
repay, repurchase (and retire) or redeem unsubordinated
Indebtedness of the Company or any Restricted Subsidiary, or to
redeem or repurchase Capital Stock of any Restricted Subsidiary
or Regulated Subsidiary (in each case to the extent permitted by
the Indenture), in each case owing to or owned by a Person other
than the Company or any Affiliate of the Company; or
(B) invest an equal amount, or the amount not so applied
pursuant to clause (A) (or enter into a definitive agreement
committing to so invest within 12 months after the date of
such agreement), in Replacement Assets; provided that, to
the extent the assets subject to such Asset Sale were
Collateral, such Replacement Assets shall also be
Collateral; and
(2) apply, not later than the end of such
12-month
period referred to in clause (1) above, such Net Cash
Proceeds (to the extent not applied pursuant to clause (1)
above) as provided in the following paragraphs of this
Limitation on Asset Sales covenant.
The amount of such excess Net Cash Proceeds required to be
applied (or to be committed to be applied) during such
12-month
period as set forth in clause (1) of the preceding sentence
and not applied as so required by the end of such period shall
constitute Excess Proceeds.
48
If, as of the first day of any calendar month, the aggregate
amount of Excess Proceeds not theretofore subject to an Offer to
Purchase pursuant to this Limitation on Asset Sales
covenant totals at least $15.0 million, the Company must
commence, not later than the fifteenth Business Day of such
month, and consummate an Offer to Purchase from the Holders
(and, if required by the terms of any Pari Passu Lien
Indebtedness, from the holders of such Pari Passu Lien
Indebtedness) on a pro rata basis an aggregate principal amount
of notes (and Pari Passu Lien Indebtedness) equal to the Excess
Proceeds on such date, at a purchase price equal to 100% of
their principal amount, plus, in each case, accrued interest (if
any) and Additional Interest (if any) to, but not including, the
Payment Date.
To the extent that the aggregate amount of notes and Pari Passu
Lien Indebtedness so validly tendered and not properly withdrawn
pursuant to an Offer to Purchase is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for
any other purpose which is permitted by the Indenture.
If the aggregate principal amount of notes surrendered by
Holders thereof and other Pari Passu Lien Indebtedness
surrendered by holders or lenders, collectively, exceeds the
amount of Excess Proceeds, the Trustee shall select the notes
and Pari Passu Lien Indebtedness to be purchased on a pro rata
basis on the basis of the aggregate principal amount of tendered
notes and Pari Passu Lien Indebtedness. Upon completion of such
Offer to Purchase, the amount of Excess Proceeds shall be reset
to zero.
Limitation
on Lines of Business
The Company will not, and will not permit any Restricted
Subsidiary or Regulated Subsidiary to, engage in any business
other than a Related Business, except to an extent that so doing
would not be material to the Company and its Restricted
Subsidiaries, taken as a whole.
Repurchase
of the Notes upon a Change of Control
The Company must commence, within 30 days of the occurrence
of a Change of Control, and consummate an Offer to Purchase for
all notes then outstanding, at a purchase price equal to 101% of
their principal amount, plus accrued interest (if any) and
Additional Interest (if any) to, but not including, the Payment
Date.
There can be no assurance that the Company will have sufficient
funds available at the time of any Change of Control to make any
payment required by the foregoing covenant (as well as may be
contained in other Indebtedness of the Company which might be
outstanding at the time).
The above covenant requiring the Company to repurchase the notes
will, unless consents are obtained, require the Company to repay
all indebtedness then outstanding which by its terms would
prohibit such note repurchase, either prior to or concurrently
with such note repurchase.
The Change of Control purchase feature of the notes may in
certain circumstances make more difficult or discourage a sale
or takeover of us and, thus, the removal of incumbent
management. The Change of Control purchase feature is a result
of negotiations between the initial purchasers of the notes and
us. After the Closing Date, we have no present intention to
engage in a transaction involving a Change of Control, although
it is possible that we could decide to do so in the future.
Subject to the limitations discussed below, we could, in the
future, enter into certain transactions, including acquisitions,
refinancings or other recapitalizations, that would not
constitute a Change of Control under the Indenture, but that
could increase the amount of Indebtedness outstanding at such
time or otherwise affect our capital structure or credit
ratings. Restrictions on our ability to incur additional
Indebtedness are contained in the covenants described under
Covenants Limitation on Indebtedness and
Issuances of Preferred Stock and
Covenants Limitation on Liens. Such
restrictions in the Indenture can be waived only with the
consent of the Holders of a majority in principal amount of the
notes then outstanding. Except for the limitations contained in
such covenants, however, the Indenture will not contain any
covenants or provisions that may afford Holders of the notes
protection in a highly levered transaction.
The Company will not be required to make an Offer to Purchase
upon the occurrence of a Change of Control, if (1) a third
party makes an offer to purchase the notes in the manner, at the
times and price and
49
otherwise in compliance with the requirements of the Indenture
applicable to an Offer to Purchase for a Change of Control and
purchases all notes validly tendered and not withdrawn in such
offer to purchase or (2) notice of redemption has been
given pursuant to the indenture as described under the caption
Optional Redemption, unless and until
there is a default in payment of the applicable redemption
price. Notwithstanding anything to the contrary herein, a Change
of Control Offer may be made in advance of a Change of Control,
conditional upon such Change of Control.
SEC
Reports and Reports to Holders
The Company will deliver to the Trustee within 30 days
after the filing of the same with the Securities and Exchange
Commission, copies of the quarterly and annual reports and of
the information, documents and other reports, if any, which the
Company is required to file with the Securities and Exchange
Commission pursuant to Section 13 or 15(d) of the Exchange
Act. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company will file with the Securities and
Exchange Commission, to the extent permitted, and provide the
Trustee and Holders with such annual reports and such
information, documents and other reports specified in
Sections 13 and 15(d) of the Exchange Act, provided
that the Company need not file such reports or other
information if, and so long as, it would not be required to do
so pursuant to
Rule 12h-5
under the Exchange Act.
Notwithstanding the foregoing, the Company will be deemed to
have furnished such reports referred to above to the Trustee and
the Holders if the Company has filed such reports with the SEC
via the EDGAR filing system and such reports are publicly
available.
Notwithstanding anything herein to the contrary, the Company
will not be deemed to have failed to comply with any of its
agreements hereunder for purposes of clause (d) under
Events of Default until 120 days after the date
any report hereunder is required to be filed with the SEC (or
otherwise made available to holders or the Trustee) pursuant to
this covenant.
Effectiveness
of Covenants
The covenants described under Limitation on
Indebtedness and Issuances of Preferred Stock,
Limitation on Restricted Payments,
Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries or Regulated
Subsidiaries, Future Subsidiary
Guarantees, Limitation on
Transactions with Shareholders and Affiliates,
Limitation on Asset Sales,
SEC reports,
Limitation on Lines of Business, (the
Suspended Covenants) will be suspended upon
the Company attaining Investment Grade Status. The Suspended
Covenants will not be reinstated regardless of whether the
Companys credit rating is subsequently downgraded from
Investment Grade Status.
If at any time the Company is downgraded from Investment Grade
Status, then the Suspended Covenants will thereafter be
reinstated as if such covenants had never been suspended (the
Reinstatement Date) and be applicable
pursuant to the terms of the Indenture (including in connection
with performing any calculation or assessment to determine
compliance with the terms of the Indenture), unless and until
the Company subsequently attains Investment Grade Status and no
Default or Event of Default is in existence (in which event the
Suspended Covenants shall no longer be in effect for such time
that the Company maintains Investment Grade Status);
provided, however, that no Default, Event of
Default or breach of any kind shall be deemed to exist or have
occurred under the Indenture, the notes, the Subsidiary
Guarantees or any of the Security Documents with respect to the
Suspended Covenants based on, and none of the Company or any of
its Subsidiaries shall bear any liability for, any actions taken
or events occurring during the Suspension Period (as defined
below), or any actions taken at any time pursuant to any
contractual obligation arising prior to the Reinstatement Date,
regardless of whether such actions or events would have been
permitted if the applicable Suspended Covenants remained in
effect during such period. The period of time between the date
of suspension of the covenants and the Reinstatement Date is
referred to as the Suspension Period.
On the Reinstatement Date, all Indebtedness Incurred during the
Suspension Period will be deemed to have been outstanding on the
Closing Date, so that it is classified as permitted under
clause (3) of the second paragraph of part (a) of the
Limitation on Indebtedness and Issuances of Preferred
Stock covenant.
50
Calculations made after the Reinstatement Date of the amount
available to be made as Restricted Payments under the
Limitation on Restricted Payments covenant will be
made as though the Limitation on Restricted Payments
covenant had been in effect since the Closing Date and
throughout the Suspension Period. Accordingly, Restricted
Payments made during the Suspension Period will reduce the
amount available to be made as Restricted Payments under the
Limitation on Restricted Payments covenant to the
extent such Restricted Payments were not otherwise permitted to
be made pursuant to clauses (1) through (14) of part
(c) of the Limitation on Restricted Payments
covenant; provided that the amount available to be made
as Restricted Payments on the Reinstatement Date under the
Limitation on Restricted Payments covenant shall not
be reduced below zero solely as a result of such Restricted
Payments made during a Suspension Period. The Company will
provide the Trustee with written notice of the commencement of
any Suspension Period or Reinstatement Date. Until the Trustee
receives such notice, it shall be entitled to assume no such
Suspension Period or Reinstatement Date, as applicable, has
occurred.
Events of
Default
The following events are defined as Events of
Default in the Indenture:
(a) default in the payment of principal of (or premium, if
any, on) any note when the same becomes due and payable at
maturity, upon acceleration, redemption or otherwise;
(b) default in the payment of interest or Additional
Interest (as required by the Registration Rights Agreement) on
any note when the same becomes due and payable, and such default
continues for a period of 30 days;
(c) default in the performance or breach of the provisions
of the Indenture applicable to mergers, consolidations and
transfers of all or substantially all of the assets of the
Company or the failure by the Company to make or consummate an
Offer to Purchase in accordance with the Limitation on
Asset Sales or Repurchase of the Notes upon a Change
of Control covenant;
(d) the Company or any Subsidiary Guarantor defaults in the
performance of or breaches any other covenant or agreement in
the Indenture, under the notes (other than a default specified
in clause (a), (b) or (c) above) or under the Security
Documents and such default or breach continues for a period of
60 consecutive days after written notice by the Trustee or
the Holders of 25% or more in aggregate principal amount of the
notes;
(e) there occurs with respect to any issue or issues of
Indebtedness of the Company or any Significant Subsidiary having
an outstanding principal amount of $25.0 million or more in
the aggregate for all such issues of all such Persons, whether
such Indebtedness now exists or shall hereafter be created,
(I) an event of default that has caused the holder thereof
to declare such Indebtedness to be due and payable prior to its
Stated Maturity and such Indebtedness has not been discharged in
full or such acceleration has not been rescinded or annulled
within 60 days of such acceleration or (II) the
failure to make a principal payment at the final (but not any
interim) fixed maturity and such defaulted payment shall not
have been made, waived or extended within applicable grace
periods;
(f) any final judgment or order (not covered by insurance),
that is non-appealable, for the payment of money in excess of
$25.0 million in the aggregate for all such final judgments
or orders against all such Persons (treating any deductibles,
self-insurance or retention as not so covered) shall be rendered
against the Company or any Significant Subsidiary and shall not
be paid or discharged, and there shall be any period of 45
consecutive days following entry of the final judgment or order
that causes the aggregate amount for all such final judgments or
orders outstanding and not paid or discharged against all such
Persons to exceed $25.0 million during which a stay of
enforcement of such final judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect;
(g) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of the Company or
any Significant Subsidiary in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, (B) appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Company or any Significant Subsidiary
51
or for all or substantially all of the property and assets of
the Company or any Significant Subsidiary or (C) the
winding up or liquidation of the affairs of the Company or any
Significant Subsidiary and, in each case, such decree or order
shall remain unstayed and in effect for a period of 30
consecutive days;
(h) the Company or any Significant Subsidiary
(A) commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in
effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (B) consents to the
appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official
of the Company or any Significant Subsidiary or for all or
substantially all of the property and assets of the Company or
any Significant Subsidiary or (C) effects any general
assignment for the benefit of creditors;
(i) failure by any Regulated Significant Subsidiary to meet
the minimum capital requirements imposed by applicable
regulatory authorities, and such condition continues for a
period of 30 days after the Company or such Regulated
Subsidiary first becomes aware of such failure;
(j) the Company or any Subsidiary that holds Capital Stock
of a Regulated Significant Subsidiary shall become ineligible to
hold such Capital Stock by reason of a statutory
disqualification or otherwise;
(k) the Commission shall revoke the registration of any
Regulated Significant Subsidiary as a broker-dealer under the
Exchange Act or any such Regulated Subsidiary shall fail to
maintain such registration;
(l) the Examining Authority (as defined in
Rule 15c3-1)
for any Regulated Significant Subsidiary shall suspend (and
shall not reinstate within 10 days) or shall revoke such
Regulated Subsidiarys status as a member organization
thereof;
(m) the occurrence of any event of acceleration in a
subordination agreement, as defined in Appendix D to
Rule 15c3-1
of the Exchange Act, to which the Company or any Regulated
Significant Subsidiary is a party;
(n) any Subsidiary Guarantor repudiates its obligations
under its Subsidiary Guarantee or, except as permitted by the
Indenture, any Subsidiary Guarantee is determined to be
unenforceable or invalid or shall for any reason cease to be in
full force and effect; or
(o) with respect to any Collateral having a fair market
value in excess of $10.0 million, individually or in the
aggregate, the failure of the security interest with respect to
such Collateral under the Security Documents, at any time, to be
in full force and effect for any reason other than in accordance
with the terms of the Security Documents and the terms of the
Indenture and other than the satisfaction in full of all
obligations under the Indenture and discharge of the Indenture
if such failure continues for 30 days, except in each case
for the failure or loss of perfection resulting from the failure
of the Collateral Agent to maintain possession of certificates
actually delivered to it representing securities pledged under
the Security Documents.
Subject to the terms of the Security Documents, if an Event of
Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to
the Company or any Subsidiary Guarantor) occurs and is
continuing under the Indenture, the Trustee or the Holders of at
least 25% in aggregate principal amount of the notes, then
outstanding, by written notice to the Company (and to the
Trustee if such notice is given by the Holders), may, and the
Trustee at the request of such Holders shall, declare the
principal of, premium, if any, and accrued interest and
Additional Interest, if any, on the notes to be immediately due
and payable. Upon a declaration of acceleration, such principal
of, premium, if any, and accrued interest and Additional
Interest, if any, shall be immediately due and payable. In the
event of a declaration of acceleration because an Event of
Default set forth in clause (e) above has occurred and is
continuing, such declaration of acceleration shall be
automatically rescinded and annulled if the event of default
triggering such Event of Default pursuant to clause (e)
shall be remedied or cured by the Company or the relevant
Significant Subsidiary or waived by the holders of the relevant
Indebtedness within 60 days after the declaration of
acceleration with respect thereto. If an Event of Default
specified in clause (g) or (h) above occurs with
respect to the Company, the principal of, premium, if any, and
accrued interest and Additional Interest, if any,
52
on the notes then outstanding shall automatically become and be
immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder. The Holders of at
least a majority in principal amount of the outstanding notes by
written notice to the Company and to the Trustee, may waive all
past defaults and rescind and annul a declaration of
acceleration and its consequences if (x) all existing
Events of Default, other than the nonpayment of the principal
of, premium, if any, and interest and Additional Interest (if
any) on the notes that have become due solely by such
declaration of acceleration, have been cured or waived,
(y) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction and (z) all
outstanding fees and expenses of the Trustee incurred in
connection with such default have been paid. For information as
to the waiver of defaults, see Modification
and Waiver.
Subject to the terms of the Security Documents, the Holders of
at least a majority in aggregate principal amount of the
outstanding notes may direct the time, method and place of
conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the
Trustee. However, the Trustee may refuse to follow any direction
that conflicts with law or the Indenture, that may involve the
Trustee in personal liability, or that the Trustee determines in
good faith may be unduly prejudicial to the rights of Holders of
notes not joining in the giving of such direction and may take
any other action it deems proper that is not inconsistent with
any such direction received from Holders of notes. A Holder may
not pursue any remedy with respect to the Indenture or the notes
unless:
(1) the Holder gives the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal
amount of outstanding notes make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer the Trustee indemnity
satisfactory to the Trustee against any costs, liability or
expense;
(4) the Trustee does not comply with the request within
60 days after receipt of the request and the offer of
indemnity; and
(5) during such
60-day
period, the Holders of a majority in aggregate principal amount
of the outstanding notes do not give the Trustee a direction
that is inconsistent with the request.
However, such limitations do not apply to the right of any
Holder of a note to receive payment of the principal of,
premium, if any, or interest or Additional Interest (if any) on,
such note or to bring suit for the enforcement of any such
payment, on or after the due date expressed in the notes, which
right shall not be impaired or affected without the consent of
the Holder.
The trustee shall, within 90 days of the occurrence of a
default, give to the Holders of the notes notice of all uncured
defaults known to it, but the Trustee may withhold such notice
if it, in good faith, determines that the withholding of such
notice is in the best interest of such Holders, except in the
case of a default in the payment of the principal of or interest
or Additional Interest (if any) on any of the notes.
Officers of the Company must deliver to the Trustee, on or
before a date not more than 120 days after the end of each
fiscal year, a certificate indicating whether the signers
thereof know of any default that occurred during the previous
year. The Company will also be obligated to notify the Trustee
of any default or defaults in the performance of any covenants
or agreements under the Indenture.
Consolidation,
Merger and Sale of Assets
The Company will not consolidate with, merge with or into, or
sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its property and assets (as an entirety or
substantially an entirety in one transaction or a series of
related transactions) to, any Person or permit any Person to
merge with or into it unless:
(1) it shall be the continuing Person, or the Person (if
other than it) formed by such consolidation or into which it is
merged or that acquired or leased such property and assets of
(the Surviving Person) shall be an entity
organized and validly existing under the laws of the United
States of America or any
53
jurisdiction thereof and shall expressly assume, by a
supplemental indenture, executed and delivered to the Trustee,
all of the Companys obligations under the Indenture, the
Security Documents and the notes and, to the extent required by
and subject to the limitations set forth in the Security
Documents, will cause such amendments, supplements or other
instruments to be executed, filed and recorded in such
jurisdictions as may be required by applicable law to preserve
and protect the Lien on the Collateral owned by or transferred
to the Surviving Person, together with such financing statements
or comparable documents to the extent required by and subject to
the limitations set forth in the Security Documents, as may be
required to perfect any security interests in such Collateral
which may be perfected by the filing of a financing statement or
a similar document under the Uniform Commercial Code or other
similar statute or regulation of the relevant states or
jurisdictions; provided, that if such continuing Person
or Person shall not be a corporation, such entity shall organize
or have a Wholly-Owned Subsidiary in the form of a corporation
organized and validly existing under the laws of the United
States or any jurisdiction thereof, and shall cause such
corporation to expressly assume, as a party to the supplemental
indenture referenced above, as a co-obligor, each of such
continuing Person or Persons obligations under the
Indenture, the Security Documents and the notes;
(2) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be
continuing;
(3) immediately after giving effect to such transaction on
a pro forma basis the Company or the Surviving Person, as
the case may be, (1) could Incur at least $1.00 of
Indebtedness pursuant to the Consolidated Fixed Charge Coverage
Ratio test set forth in the first paragraph of the
Limitation on Indebtedness and Issuances of Preferred
Stock covenant or (2) the Consolidated Fixed Charge
Coverage Ratio would be greater than or equal to such ratio for
the Company and the Restricted Subsidiaries immediately prior to
such transaction;
(4) it delivers to the Trustee an Officers
Certificate and an Opinion of Counsel, in each case stating that
such consolidation, merger or transfer and such supplemental
indenture complies with this provision and that all conditions
precedent provided for herein relating to such transaction have
been complied with; and
(5) each Subsidiary Guarantor, unless such Subsidiary
Guarantor is the Person with which the Company has entered into
a transaction under this Consolidation, Merger and Sale of
Assets section, shall have by amendment to its Subsidiary
Guarantee confirmed that its Subsidiary Guarantee shall apply to
the obligations of the Company or the Surviving Person in
accordance with the notes and the Indenture;
provided, however, that clause (3) above does
not apply if, in the good faith determination of the Board of
Directors of the Company, whose determination shall be evidenced
by a Board Resolution, the principal purpose of such transaction
is to change the state of organization or convert the form of
organization of the Company to another form, and any such
transaction shall not have as one of its purposes the evasion of
the foregoing limitations.
Defeasance
Legal
Defeasance and Covenant Defeasance
The obligations of the Company and the Subsidiary Guarantors
under the Indenture and the Security Documents will terminate
(other than certain obligations) and will be released upon
payment in full of all of the notes issued under the Indenture.
The Company may, at its option and at any time, elect to have
all of its obligations discharged with respect to the notes
issued under the Indenture and the Security Documents, cause the
release of all Liens on the Collateral granted under the
Security Documents, and have each Guarantors
54
obligation discharged with respect to its Guarantee
(Legal Defeasance) and cure all then existing
Events of Default except for:
(1) the rights of Holders of notes issued under the
Indenture to receive payments in respect of the principal of,
premium, if any, and interest on such notes when such payments
are due solely out of the trust created pursuant to the
Indenture;
(2) the Companys obligations with respect to notes
issued under the Indenture concerning issuing temporary notes,
registration of such notes, mutilated, destroyed, lost or stolen
notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of
the Trustee, and the Companys obligations in connection
therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time,
elect to have the Liens on the Collateral granted under the
Security Documents released and its obligations and those of
each Subsidiary Guarantor released with respect to
clauses (2) and (3) under Consolidation, Merger
and Sale of Assets and all the covenants described herein
under Covenants, (Covenant
Defeasance) and thereafter any omission to comply with
such obligations shall not constitute a Default or Event of
Default with respect to the notes. In the event Covenant
Defeasance occurs, certain events (not including failure to pay
or bankruptcy, receivership, rehabilitation and insolvency
events pertaining to the Company) described under Events
of Default and Remedies will no longer constitute an Event
of Default with respect to the notes.
In order to exercise either Legal Defeasance or Covenant
Defeasance with respect to the notes issued under the Indenture:
(1) the Company must irrevocably deposit with the Trustee,
in trust, for the benefit of the Holders, cash in
U.S. dollars, Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public
accountants without consideration of any reinvestment of
interest, to pay the principal of, premium, if any, and interest
due on the notes issued under the Indenture on the stated
maturity date or on the redemption date, as the case may be, of
such principal, premium, if any, or interest on the notes;
(2) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel confirming that,
subject to customary assumptions and exclusions;
(a) the Company has received from, or there has been
published by, the United States Internal Revenue Service a
ruling; or
(b) since the issuance of the notes, there has been a
change in the applicable U.S. federal income tax law;
in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, subject to customary
assumptions and exclusions, the Holders will not recognize
income, gain or loss for U.S. federal income tax purposes
as a result of such Legal Defeasance and will be subject to
U.S. federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Company shall
have delivered to the Trustee an Opinion of Counsel confirming
that, subject to customary assumptions and exclusions, the
Holders will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of such
Covenant Defeasance and will be subject to U.S. federal
income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant
Defeasance had not occurred;
(4) no Default or Event of Default (other than that
resulting from borrowing funds to be applied to make such
deposit or the granting of Liens in connection therewith) shall
have occurred and be continuing on the date of such deposit;
55
(5) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default
under any Credit Facility or any other material agreement or
instrument (other than the Indenture) to which, the Company or
any Subsidiary Guarantor is a party or by which the Company or
any Subsidiary Guarantor is bound (other than that resulting
from borrowing funds to be applied to make such deposit and the
granting of Liens in connection therewith);
(6) the Company shall have delivered to the Trustee an
Officers Certificate stating that the deposit was not made
by the Company with the intent of defeating, hindering, delaying
or defrauding any creditors of the Company or any Subsidiary
Guarantor or others; and
(7) the Company shall have delivered to the Trustee an
Officers Certificate and an Opinion of Counsel (which
opinion of counsel may be subject to customary assumptions and
exclusions) each stating that all conditions precedent provided
for or relating to the Legal Defeasance or the Covenant
Defeasance, as the case may be, have been complied with.
Satisfaction
and Discharge
The Indenture will be automatically discharged and will cease to
be of further effect as to all notes issued thereunder, when
either
(a) all such notes theretofore authenticated and delivered,
except lost stolen or destroyed notes which have been replaced
or paid and notes for whose payment money has theretofore been
deposited in trust, have been delivered to the Trustee for
cancellation; or
(b) (1) all such notes not theretofore delivered to
such Trustee for cancellation have become due and payable by
reason of the making of a notice of redemption or otherwise or
will become due and payable within one year or are to be called
for redemption within one year under arrangements satisfactory
to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company and the
Company or any Subsidiary Guarantor has irrevocably deposited or
caused to be deposited with such Trustee as trust funds in trust
solely for the benefit of the Holders, cash in
U.S. dollars, Government Securities, or a combination
thereof, in such amounts as will be sufficient without
consideration of any reinvestment of interest to pay and
discharge the entire indebtedness on such notes not theretofore
delivered to the Trustee for cancellation for principal,
premium, if any, and accrued interest to the date of maturity or
redemption;
(2) no Default or Event of Default (other than that
resulting from borrowing funds to be applied to make such
deposit or the granting of Liens in connection therewith) with
respect to the Indenture or the notes issued thereunder shall
have occurred and be continuing on the date of such deposit or
shall occur as a result of such deposit and such deposit will
not result in a breach or violation of, or constitute a default
under, any other instrument to which the Company or any
Subsidiary Guarantor is a party or by which the Company or any
Subsidiary Guarantor is bound (other than an instrument to be
terminated contemporaneously with or prior to the borrowing of
funds to be applied to make such deposit and the granting of
Liens in connection therewith); and
(3) the Company has delivered irrevocable instructions to
the Trustee under the Indenture to apply the deposited money
toward the payment of such notes at maturity or the redemption
date, as the case may be.
In addition, the Company must deliver an Officers
Certificate and an Opinion of Counsel (which opinion of counsel
may be subject to customary assumptions and exclusions) to the
Trustee stating that all conditions precedent to satisfaction
and discharge have been satisfied.
Upon discharge of the Indenture, the Security Documents will
automatically terminate and cease to be of further effect and
all Liens on the Collateral granted under the Security Documents
will be released.
56
Modification
and Waiver
The Indenture and the Security Documents may be amended or
supplemented, without the consent of any Holder, to:
(1) cure any ambiguity, defect or inconsistency in the
Indenture;
(2) comply with the provisions described under
Consolidation, Merger and Sale of Assets or
Future Subsidiary Guarantees;
(3) comply with any requirements of the Securities and
Exchange Commission in connection with the qualification of the
Indenture under the TIA;
(4) evidence and provide for the acceptance of appointment
by a successor trustee;
(5) make any change that would provide any additional
rights or benefits to the Holders or make any change that, in
the good faith opinion of the Board of Directors of the Company
as evidenced by a Board Resolution, does not materially and
adversely affect the rights of any Holder;
(6) provide for uncertificated notes in addition to or in
place of certificated notes;
(7) provide for the issuance of Additional Notes in
accordance with the Indenture;
(8) add or release Guarantees with respect to the notes, in
each case, in accordance with the applicable provisions of the
Indenture;
(9) add additional assets as Collateral or release
Collateral, in each case, in accordance with the applicable
provisions of the Indenture and the Security Documents;
(10) enter into additional or supplemental Security
Documents; or
(11) conform any provision contained in the Indenture or
any Security Documents to this Description of the
notes.
Modifications and amendments of the Indenture and the Security
Documents may be made by the Company and the Trustee with the
consent of the Holders of not less than a majority in aggregate
principal amount of the outstanding notes; provided,
however, that no such modification or amendment may,
without the consent of each Holder affected thereby:
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any note;
(2) reduce the principal amount of, or premium, if any, or
interest on, any note;
(3) change the optional redemption dates or optional
redemption prices of the notes from that stated under the
caption Optional Redemption;
(4) change the place or currency of payment of principal
of, or premium, if any, or interest on, any note;
(5) impair the right to institute suit for the enforcement
of any payment on or after the Stated Maturity (or, in the case
of a redemption, on or after the Redemption Date) of any
note;
(6) waive a default in the payment of principal of,
premium, if any, or interest on the notes or modify any
provision of the Indenture relating to modification or amendment
thereof;
(7) reduce the above-stated percentage of outstanding notes
of such series, the consent of whose holders is necessary to
modify or amend the applicable indenture;
(8) release any Subsidiary Guarantor from its Subsidiary
Guarantee, except as provided in the Indenture;
(9) reduce the percentage or aggregate principal amount of
outstanding notes the consent of whose Holders is necessary for
waiver of compliance with certain provisions of the Indenture or
for waiver of certain defaults; or
57
(10) release all or substantially all of the Collateral,
other than in accordance with the Indenture and the Security
Documents.
The consent of the Holders is not necessary under the Indenture
to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the
proposed amendment.
After an amendment under the Indenture becomes effective, the
Company is required to mail or electronically transmit to the
respective Holders a notice briefly describing such amendment.
However, the failure to give such notice to all Holders entitled
to receive such notice, or any defect therein, will not impair
or affect the validity of the amendment.
No
Personal Liability of Incorporators, Stockholders, Officers,
Directors, or Employees
No recourse for the payment of the principal of, premium, if
any, or interest or Additional Interest (if any) on any of the
notes or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant
or agreement of the Company in the Indenture, the Registration
Rights Agreement, the Security Documents or in any of the notes
or because of the creation of any Indebtedness represented
thereby, shall be had against any incorporator, stockholder,
officer, director, employee, manager, partner, equityholder or
controlling person of the Company or of any successor Person
thereof. Each Holder, by accepting the notes, waives and
releases all such liability. The waiver and release are part of
the consideration for the issuance of the notes. Such waiver may
not be effective to waive liabilities under the federal
securities laws.
The
Trustee
Except during the continuance of a Default, the Trustee will not
be liable, except for the performance of such duties as are
specifically set forth in the Indenture. If an Event of Default
has occurred and is continuing, the Trustee will use the same
degree of care and skill in its exercise of the rights and
powers vested in it under the Indenture as a prudent person
would exercise under the circumstances in the conduct of such
persons own affairs.
The Indenture and provisions of the TIA, incorporated by
reference therein contain limitations on the rights of the
Trustee, should it become a creditor of the Company, to obtain
payment of claims in certain cases or to realize on certain
property received by it in respect of any such claims, as
security or otherwise. The trustee is permitted to engage in
other transactions; provided, however, that if it
acquires any conflicting interest, it must eliminate such
conflict or resign.
Additional
Information
Anyone who receives this prospectus may obtain a copy of the
Indenture and Registration Rights Agreement without charge by
writing to 125 Broad Street, New York, New York 10004,
Attention: Secretary.
Definitions
Set forth below are defined terms used in the covenants and
other provisions of the Indenture. Reference is made to the
Indenture for other capitalized terms used in this
Description of the notes for which no definition is
provided.
Accreted Value means at any time, with
respect to any Pari Passu Obligation issued with an original
issue discount, accreted value of such Pari Passu
Obligation at such time representing the stated principal or
face amount thereof reduced by that portion of the related
original issue discount corresponding to the ratio of the
remaining term thereof to the original term thereof.
Acquired Indebtedness means Indebtedness of a
Person existing at the time such Person becomes a Restricted
Subsidiary or Indebtedness of a Restricted Subsidiary assumed in
connection with an Asset Acquisition by such Restricted
Subsidiary; provided such Indebtedness was not Incurred
in connection with or in contemplation of such Person becoming a
Restricted Subsidiary or such Asset Acquisition.
58
Additional Interest means the interest
payable as a consequence of the failure to effectuate in a
timely manner the exchange offer
and/or shelf
registration procedures set forth in the Registration Rights
Agreement.
Adjusted Consolidated Net Income means, for
any period, the aggregate net income (or loss) of the Company
and its Restricted Subsidiaries and Regulated Subsidiaries for
such period determined on a consolidated basis in conformity
with GAAP; provided that the following items shall be
excluded in computing Adjusted Consolidated Net Income (without
duplication):
(1) the net income (or loss) of any Person that is not a
Restricted Subsidiary or Regulated Subsidiary, except that the
Companys equity in the net income of any such Person for
such period (to the extent not otherwise excluded pursuant to
clauses (2) through (6) below) will be included up to
the aggregate amount of cash actually distributed by such Person
during such period to the Company or to its Restricted
Subsidiaries or Regulated Subsidiaries (less minority interest
therein) as a dividend or other distribution;
(2) the net income (or loss) of any Person accrued prior to
the date it becomes a Restricted Subsidiary or Regulated
Subsidiary or is merged into or consolidated with the Company or
any of its Restricted Subsidiaries or Regulated Subsidiaries or
all or substantially all of the property and assets of such
Person are acquired by the Company or any of its Restricted
Subsidiaries or Regulated Subsidiaries;
(3) the net income of any Restricted Subsidiary to the
extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of such net income
is not at the time permitted by the operation of the terms of
its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to
such Restricted Subsidiary;
(4) the net income of any Regulated Subsidiary to the
extent that the declaration or payment of dividends or similar
distributions by such Regulated Subsidiary of such net income is
not at the time permitted by the operation of the terms of its
charter or any agreement or instrument with a Person, other than
such Regulated Subsidiaries applicable regulatory
authorities, or any judgment or decree applicable to such
Regulated Subsidiary other than to the extent that such
Regulated Subsidiary reasonably believes (as determined by
Senior Management acting in good faith), that such net income
could be distributed, declared or paid as a dividend or similar
distribution without causing such Regulated Subsidiary to fail
to be at least adequately capitalized as defined in
the regulations of applicable regulatory authorities, or to meet
minimum capital requirements imposed by applicable regulatory
authorities;
(5) any gains or losses (on an after-tax basis)
attributable to Asset Sales or Regulated Sales;
(6) solely for purposes of calculating the amount of
Restricted Payments that may be made pursuant to clause (D)
of the first paragraph of the Limitation on Restricted
Payments covenant, any amount paid or accrued as dividends
on Preferred Stock of the Company owned by Persons other than
the Company and any of its Restricted Subsidiaries and Regulated
Subsidiaries;
(7) all extraordinary gains and, solely for purposes of
calculating the Consolidated Fixed Charge Coverage Ratio and the
Secured Leverage Ratio, extraordinary losses;
(8) the cumulative effect of changes in accounting
principles; and
(9) the net after-tax effect of impairment charges related
to goodwill and other intangible assets.
Affiliate means, as applied to any Person,
any other Person directly or indirectly controlling, controlled
by, or under direct or indirect common control with, such
Person. For purposes of this definition, control
(including, with correlative meanings, the terms
controlling, controlled by and
under common control with), as applied to any
Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
Applicable Authorized Representative means
(i) until the occurrence of the Non-Controlling Authorized
Representative Enforcement Date (if any), the Controlling
Authorized Representative and (ii) from and after
59
the occurrence of the Non-Controlling Authorized Representative
Enforcement Date, the Major Non-Controlling Authorized
Representative.
Applicable Premium means, with respect to any
note on any applicable redemption date, the greater of:
(1) 1% of the then outstanding principal amount of the
note; and
(2) the excess of:
(a) the present value at such redemption date of
(i) the redemption price of the note, at April 15,
2014 (such redemption price being set forth in the table
appearing above under Optional
redemption) plus (ii) all required interest payments
due on the note through April 15, 2014 (in each case
excluding accrued but unpaid interest), computed using a
discount rate equal to the Treasury Rate as of such redemption
date plus 50 basis points; over
(b) the then outstanding principal amount of the note.
Asset Acquisition means (1) an
investment by the Company or any of its Restricted Subsidiaries
or Regulated Subsidiaries in any other Person pursuant to which
such Person shall become a Restricted Subsidiary or a Regulated
Subsidiary or shall be merged into or consolidated with the
Company or any of its Restricted Subsidiaries or Regulated
Subsidiaries; provided that such Persons primary
business is a Related Business or (2) an acquisition by the
Company or any of its Restricted Subsidiaries or Regulated
Subsidiaries of the property and assets of any Person other than
the Company or any of its Restricted Subsidiaries or Regulated
Subsidiaries that constitute substantially all of a division or
line of business of such Person that is a Related Business.
Asset Sale means any sale, transfer or other
disposition (including by way of merger, consolidation or
Sale-Leaseback Transaction) in one transaction or a series of
related transactions by the Company or any of its Restricted
Subsidiaries to any Person other than the Company or any of its
Restricted Subsidiaries or Regulated Subsidiaries of:
(1) all or any of the Capital Stock of any Restricted
Subsidiary;
(2) all or substantially all of the property and assets of
an operating unit or business of the Company or any of its
Restricted Subsidiaries; or
(3) any other property and assets (other than the Capital
Stock or other Investment in an Unrestricted Subsidiary) of the
Company or any of its Restricted Subsidiaries outside the
ordinary course of business of the Company or such Restricted
Subsidiary and, in each case, that is not governed by the
provisions of the Indenture applicable to mergers,
consolidations and sales of assets of the Company; provided
that Asset Sale shall not include:
(a) sales or other dispositions of Investment Securities,
inventory, receivables and other current assets;
(b) sales, transfers or other dispositions of assets
constituting a Permitted Investment or Restricted Payment
permitted to be made under the Limitation on Restricted
Payments covenant;
(c) sales, transfers or other dispositions of assets with a
fair market value not in excess of $10.0 million in any
transaction or series of related transactions;
(d) any sale, transfer, assignment or other disposition of
any property equipment that has become damaged, worn out,
obsolete or otherwise unsuitable for use in connection with the
business of the Company or its Restricted Subsidiaries;
(e) an issuance of Capital Stock by a Restricted Subsidiary
or the sale, transfer or other disposition by the Company or a
Restricted Subsidiary of the Capital Stock of a Restricted
Subsidiary or Regulated Subsidiary, in each case to the Company,
a Restricted Subsidiary or a Regulated Subsidiary;
60
(f) the sale or discount of accounts receivable arising in
the ordinary course of business in connection with the
compromise or collection thereof or in bankruptcy or similar
proceedings;
(g) a Sale and Leaseback Transaction that results in a
Capitalized Lease that constitutes Indebtedness;
(h) the issuance of Disqualified Stock or Preferred Stock
permitted under the Limitation on Indebtedness and
Issuances of Preferred Stock covenant;
(i) any exchange of assets (including a combination of
assets, Cash and Temporary Cash Investments) for assets used or
useful in a Related Business of comparable or greater market
value, as determined in good faith by the Senior Management or
the Board of Directors of the Company;
(j) any sale of Equity Interests in, or Indebtedness or
other securities of, an Unrestricted Subsidiary;
(k) the licensing, sublicensing, lease, assignment or
sublease of any real or personal property in the ordinary course
of business;
(l) any surrender or waiver of contract rights or the
settlement, release, recovery on or surrender of contract, tort
or other claims of any kind;
(m) the issuance of Equity Interests of any Subsidiary of
the Company pursuant to any employee, officer or director
compensation or benefit plans, employment agreements,
indemnification agreements or any similar arrangements entered
into in the ordinary course of business or approved in good
faith by the Board of Directors of the Company; and
(n) Permitted Liens, or foreclosure on assets as a result
of Liens permitted under the Limitation on Liens
covenant.
Authorized Representative means (i) with
respect to the Holders of the notes and the Notes Obligations,
the Collateral Agent and (ii) in the case of any Series of
Pari Passu Obligations (and the Pari Passu Secured Parties
thereunder) that become subject to the Intercreditor Agreement
after the Closing Date, the Authorized Representative named for
such Series in the Intercreditor Agreement or the applicable
Joinder Agreement (it being understood that in the event only
one lender or other Person holds all of the Pari Passu
Obligations in respect of any Series, such lender or Person
shall be the Authorized Representative of such Series upon
becoming subject to the Intercreditor Agreement).
Average Life means, at any date of
determination with respect to any Indebtedness, the quotient
obtained by dividing (1) the sum of the products of
(a) the number of years from such date of determination to
the dates of each successive scheduled principal payment of such
Indebtedness and (b) the amount of such principal payment
by (2) the sum of all such principal payments.
Board of Directors means, with respect to any
Person, the Board of Directors of such Person or any duly
authorized committee of such Board of Directors, or any other
group performing comparable functions.
Business Day means a day other than a
Saturday, Sunday or other day on which banking institutions are
authorized or required by law to close in New York City or the
city in which the Trustees designated corporate trust
office is located.
Capital Stock means, with respect to any
Person, any and all shares, interests, participations or other
equivalents (however designated, whether voting or non-voting)
in equity of such Person, whether outstanding on the Closing
Date or issued thereafter, including, without limitation, all
Common Stock and Preferred Stock.
Capitalized Lease means, as applied to any
Person, any lease of any property (whether real, personal or
mixed) of which the discounted present value of the rental
obligations of such Person as lessee, in conformity with GAAP,
is required to be capitalized on the balance sheet of such
Person.
Capitalized Lease Obligations means the
discounted present value of the rental obligations under a
Capitalized Lease.
61
Cash means U.S. dollars, pounds
sterling, euros, the national currency of any member state in
the European Union or, in the case of any Foreign Subsidiary
that is a Restricted Subsidiary, such local currencies held by
it from time to time in the ordinary course of business.
A Change of Control shall be deemed to occur
upon the occurrence of any of the following events: (1) the
sale, lease or transfer, in one or a series of related
transactions, of all or substantially all of the assets of the
Company and its Subsidiaries, taken as a whole, to a Person
other than any of the Permitted Holders or (2) the Company
becomes aware (by way of a report or any other filing pursuant
to Section 13(d) of the Exchange Act, proxy, vote, written
notice or otherwise) of the acquisition by any Person or group
(within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act, or any successor
provision), including any group acting for the purpose of
acquiring, holding or disposing of securities (within the
meaning of
Rule 13d-5(b)(1)
under the Exchange Act), other than any of the Permitted
Holders, in a single transaction or in a related series of
transactions, by way of merger, consolidation or other business
combination or purchase of beneficial ownership (within the
meaning of
Rule 13d-3
of the Exchange Act, or any successor provision), of 35% or more
of the total voting power of the Voting Stock of the Company or
any direct or indirect parent of the Company. As used in this
definition, Voting Stock means capital stock
issued by a corporation, or equivalent interests in any other
Person, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even
if the right to so vote has been suspended by the happening of
such a contingency.
Closing Date means April 12, 2011.
Collateral Agent means The Bank of New York
Mellon Trust Company, N.A., in its capacity as
Collateral Agent under the indenture, the Security
Agreement and the other Security Documents, and any successor
thereto in such capacity.
Common Stock means, with respect to any
Person, any and all shares, interests, participations or other
equivalents (however designated, whether voting or non-voting)
of such Persons equity, other than Preferred Stock of such
Person, whether outstanding on the Closing Date or issued
thereafter, including, without limitation, all series and
classes of such common stock.
Consolidated EBITDA means, for any period,
Adjusted Consolidated Net Income for such period plus, to the
extent such amount was deducted in calculating such Adjusted
Consolidated Net Income:
(1) Consolidated Interest Expense;
(2) income taxes;
(3) depreciation expense;
(4) amortization expense; and
(5) all other non-cash items (including non-cash
compensation expense relating to restricted stock awards and
stock options but excluding amortization of broker notes)
reducing Adjusted Consolidated Net Income (other than items that
will require cash payments and for which an accrual or reserve
is, or is required by GAAP to be, made), less all non-cash items
increasing Adjusted Consolidated Net Income, all as determined
on a consolidated basis for the Company, its Restricted
Subsidiaries and its Regulated Subsidiaries in conformity with
GAAP.
provided that, if any Restricted Subsidiary or Regulated
Subsidiary is not a Wholly Owned Restricted Subsidiary, or
Wholly Owned Regulated Subsidiary, as the case may be,
Consolidated EBITDA shall be reduced (to the extent not
otherwise reduced by giving effect to the minority interest in
determining Adjusted Consolidated Net Income in accordance with
GAAP) by an amount equal to (A) the amount of the Adjusted
Consolidated Net Income attributable to such Restricted
Subsidiary or Regulated Subsidiary multiplied by (B) the
percentage of Common Stock of such Restricted Subsidiary or
Regulated Subsidiary not owned on the last day of such period by
the Company or any of its Restricted Subsidiaries or any of its
Wholly Owned Regulated Subsidiaries.
62
Consolidated Fixed Charge Coverage Ratio
means, with respect to any Person, the ratio of Consolidated
EBITDA of such Person during the most recent four full fiscal
quarters (the Four Quarter Period), for which
financial statements are internally available, ending on or
prior to the date of the transaction giving rise to the need to
calculate the Consolidated Fixed Charge Coverage Ratio (the
Transaction Date), to Consolidated Fixed
Charges of such Person for the Four Quarter Period. In addition
to and without limitation of the foregoing, for purposes of this
definition, Consolidated EBITDA and Consolidated Fixed Charges
shall be calculated after giving effect on a pro forma
basis for the period of such calculation to:
(1) the incurrence, repayment or redemption of any
Indebtedness, Disqualified Stock or Preferred Stock of such
Person or any of its Restricted Subsidiaries or Regulated
Subsidiaries (and the application of the proceeds thereof)
giving rise to the need to make such calculation and any
incurrence, repayment or redemption of any other Indebtedness,
Disqualified Stock or Preferred Stock (and the application of
the proceeds thereof), other than the incurrence, repayment or
redemption of Indebtedness, Disqualified Stock or Preferred
Stock in the ordinary course of business for working capital
purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the
last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such incurrence or repayment, as the
case may be (and the application of the proceeds thereof),
occurred on the first day of the Four Quarter Period; and
(2) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the
need to make such calculation as a result of such Person or one
of its Restricted Subsidiaries or Regulated Subsidiaries
(including any Person who becomes a Restricted Subsidiary or
Regulated Subsidiaries as a result of the Asset Acquisition)
incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA
attributable to the assets which are the subject of the Asset
Acquisition or Asset Sale during the Four Quarter Period)
occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such Asset Sale or Asset
Acquisition (including the incurrence, assumption or liability
for any such Acquired Indebtedness) occurred on the first day of
the Four Quarter Period.
If such Person or any of its Restricted Subsidiaries or
Regulated Subsidiaries directly or indirectly guarantees
Indebtedness of a third Person, the preceding sentence shall
give effect to the incurrence of such guaranteed Indebtedness as
if such Person or any Restricted Subsidiary of such Person had
directly incurred or otherwise assumed such guaranteed
Indebtedness. Furthermore, in calculating Consolidated
Fixed Charges:
(1) interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date and which will
continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest
on such Indebtedness in effect on the Transaction Date;
(2) if interest on any Indebtedness actually incurred on
the Transaction Date may optionally be determined at an interest
rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the
interest rate in effect on the Transaction Date will be deemed
to have been in effect during the Four Quarter Period; and
(3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent
such interest is covered by agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum
resulting after giving effect to the operation of such
agreements.
For purposes of this definition, whenever pro forma
effect is to be given to a transaction, the pro forma
calculations shall be made in good faith by a responsible
financial or accounting officer of the Company (including pro
forma expense and cost reductions, regardless of whether
these cost savings could then be reflected in pro forma
financial statements in accordance with
Regulation S-X
promulgated under the Securities Act or any other regulation or
policy of the SEC related thereto).
Consolidated Fixed Charges means, with
respect to any Person for any period, the sum, without
duplication, of (1) Consolidated Interest Expense, plus
(2) the product of (A) the amount of all dividend
payments on any series of Preferred Stock of such Person (other
than (x) dividends paid in Qualified Capital
63
Stock or (y) dividends paid to the Company or any of its
Restricted Subsidiaries or Regulated Subsidiaries) paid, accrued
or scheduled to be paid or accrued during such period times
(B) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective
consolidated federal, state and local tax rate of such Person,
expressed as a decimal.
Consolidated Interest Expense means, for any
period, the interest expense in respect of Indebtedness of the
Company and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP.
Consolidated Net Worth means, at any date of
determination, stockholders equity as set forth on the
most recent internally available quarterly or annual
consolidated balance sheet of the Company and its Restricted
Subsidiaries and Regulated Subsidiaries (which shall be as of a
date not more than 90 days prior to the date of such
computation, and which shall not take into account Unrestricted
Subsidiaries), plus, to the extent not included, any Preferred
Stock of the Company, less any amounts attributable to
Disqualified Stock or any equity security convertible into or
exchangeable for Indebtedness, the cost of treasury stock and
the principal amount of any promissory notes receivable from the
sale of the Capital Stock of the Company or any of its
Restricted Subsidiaries or Regulated Subsidiaries, each item to
be determined in conformity with GAAP (excluding the effects of
foreign currency exchange adjustments under Financial Accounting
Standards Board Statement of Financial Accounting Standards
No. 52).
Controlling Authorized Representative has the
meaning set forth under Intercreditor
Agreement Enforcement of Security Interests.
Controlling Secured Parties means the Series
of Pari Passu Secured Parties whose Authorized Representative is
the Controlling Authorized Representative.
Credit Facility means, with respect to the
Company, one or more debt facilities or commercial paper
facilities for working capital purposes with banks or other
institutional lenders or investors or any federal, state or
local government entity or agency or financing arrangements
providing for revolving credit loans, terms loans, receivables
financing, including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from
such lenders against receivables, letters of credit or any other
long-term indebtedness, including any indenture, guarantees,
collateral documents, instruments and agreements executed in
connection therewith, and any amendments, supplements,
modifications, extensions, renewals, restatements or refundings
thereof and any indentures or credit facilities or commercial
paper facilities with banks or other institutional lenders or
investors or any federal, state or local government entity or
agency that replace, refund or refinance any part of the loans,
notes, other credit facilities or commitments thereunder,
including any such replacement, refunding or refinancing
facility or indenture that increases the amount borrowable
thereunder or alters the maturity thereof.
Default means any event that is, or after
notice or passage of time or both would be, an Event of Default.
Designated Non-cash Consideration means the
fair market value of non-cash consideration received by the
Company or one of the Restricted Subsidiaries in connection with
an Asset Sale that is so designated as Designated Non-cash
Consideration pursuant to an Officers Certificate, setting
forth the basis of such valuation, executed by the principal
financial officer of the Company, less the amount of Temporary
Cash Investments received in connection with a subsequent sale
of or collection on such Designated Non-cash Consideration.
Disqualified Stock means any class or series
of Capital Stock of any Person that by its terms or otherwise is
(1) required to be redeemed prior to a date that is
91 days following the Stated Maturity of the notes,
(2) redeemable at the option of the holder of such class or
series of Capital Stock at any time prior to the Stated Maturity
of the notes or (3) convertible into or exchangeable for
Capital Stock referred to in clause (1) or (2) above
or Indebtedness having a scheduled maturity prior to the Stated
Maturity of the notes; provided that any Capital Stock
that would not constitute Disqualified Stock but for provisions
thereof giving holders thereof the right to require such Person
to repurchase or redeem such Capital Stock upon the occurrence
of an asset sale or change of control
occurring prior to the Stated Maturity of the notes shall
64
not constitute Disqualified Stock if the asset sale
or change of control provisions applicable to such
Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in Limitation
on Asset Sales and Repurchase of the Notes upon a
Change of Control covenants and such Capital Stock
specifically provides that such Person will not repurchase or
redeem any such stock pursuant to such provision prior to the
Companys repurchase of such notes as are required to be
repurchased pursuant to the Limitation on Asset
Sales and Repurchase of the Notes upon a Change of
Control covenants.
Domestic Subsidiary means any Subsidiary
organized under the laws of the United States of America, any
State thereof or the District of Columbia, other than any such
Subsidiary a substantial portion of the assets of which are
Capital Stock of or other Investments in one or more Foreign
Subsidiaries.
Equity Interests means Capital Stock and all
warrants, options or other rights to acquire Capital Stock (but
excluding any debt security that is convertible into, or
exchangeable for, Capital Stock).
Fair Market Value means the price that would
be paid in an arms-length transaction between an informed
and willing seller under no compulsion to sell and an informed
and willing buyer under no compulsion to buy which, if
determined by the Board of Directors as evidenced by a
Resolution of the Board of Directors of the Company, shall be
conclusively determined.
Foreign Subsidiary means any Subsidiary of
the Company that is an entity which is a controlled foreign
corporation under Section 957 of the Internal Revenue Code
or any subsidiary that is otherwise organized under the laws of
a jurisdiction other than the United States, any state thereof,
or the District of Columbia.
GAAP means generally accepted accounting
principles in the United States of America as in effect as of
the Closing Date.
Government Securities means securities that
are
(1) direct obligations of the United States of America for
the timely payment of which its full faith and credit is
pledged; or
(2) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United
States of America;
which, in either case, are not callable or redeemable at the
option of the issuers thereof, and shall also include a
depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act), as custodian with
respect to any such Government Securities or a specific payment
of principal of or interest on any such Government Securities
held by such custodian for the account of the holder of such
depository receipt; provided that (except as required by
law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the
Government Securities or the specific payment of principal of or
interest on the Government Securities evidenced by such
depository receipt.
Guarantee means any obligation, contingent or
otherwise, of any Person directly or indirectly guaranteeing any
Indebtedness of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (1) to purchase or
pay (or advance or supply funds for the purchase or payment of)
such Indebtedness of such other Person (whether arising by
virtue of partnership arrangements, or by agreements to
keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arms-length
terms and are entered into in the ordinary course of business),
to
take-or-pay,
or to maintain financial statement conditions or otherwise) or
(2) entered into for purposes of assuring in any other
manner the obligee of such Indebtedness of the payment thereof
or to protect such obligee against loss in respect thereof (in
whole or in part); provided that the term
Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business or
STAMP or other signature guarantees made by a Regulated
Subsidiary in the ordinary course of its business. The term
Guarantee used as a verb has a corresponding meaning.
65
Hedging Obligations means, with respect to
any Person, the obligations of such person under
(i) currency exchange, interest rate, commodity, credit or
equity swap, forward or futures agreements, currency exchange,
interest rate, commodity, credit or equity cap agreements,
currency exchange, interest rate, commodity, credit or equity
collar agreements, or currency exchange, interest rate,
commodity, credit or equity puts or calls, and (ii) other
agreements or arrangements designed to protect such Person,
directly or indirectly, against fluctuations in currency
exchange, interest rate, commodity or equity prices.
Incur means, with respect to any
Indebtedness, to incur, create, issue, assume, Guarantee or
otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such
Indebtedness; provided that (1) any Indebtedness of
a Person existing at the time such Person becomes a Restricted
Subsidiary will be deemed to be incurred by such Restricted
Subsidiary at the time it becomes a Restricted Subsidiary and
(2) neither the accrual of interest nor the accretion of
original issue discount shall be considered an Incurrence of
Indebtedness.
Indebtedness means, with respect to any
Person at any date of determination (without duplication):
(1) all indebtedness of such Person for borrowed money;
(2) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;
(3) all obligations of such Person in respect of letters of
credit or other similar instruments (including reimbursement
obligations with respect thereto, but excluding letters of
credit issued by such Person and excluding obligations with
respect to letters of credit (including trade letters of credit)
securing obligations (other than obligations described in
(1) or (2) above or (5), (6) or (7) below)
entered into in the ordinary course of business of such Person
to the extent such letters of credit are not drawn upon or, if
drawn upon, to the extent such drawing is reimbursed no later
than the tenth Business Day following receipt by such Person of
a demand for reimbursement);
(4) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services, which purchase
price is recorded as a liability under GAAP and due more than
six months after the date of placing such property in service or
taking delivery and title thereto or the completion of such
services, except Trade Payables;
(5) all Capitalized Lease Obligations;
(6) all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is
assumed by such Person; provided that the amount of such
Indebtedness shall be the lesser of (A) the fair market
value of such asset at such date of determination and
(B) the amount of such Indebtedness;
(7) all Indebtedness of other Persons Guaranteed by such
Person to the extent such Indebtedness is Guaranteed by such
Person;
(8) Acquired Indebtedness;
(9) to the extent not otherwise included in this
definition, net obligations under Hedging Obligations (other
than Hedging Obligations not entered into for speculative
investment purposes and designed to protect the Company or its
Restricted Subsidiaries or Regulated Subsidiaries against
fluctuations in commodity prices, equity prices, foreign
currency exchange rates or interest rates and that do not
increase the Indebtedness of the obligor outstanding at any time
other than as a result of fluctuations in commodity prices,
foreign currency exchange rates or interest rates or by reason
of fees, indemnities and compensation payable
thereunder); and
(10) all obligations to redeem or repurchase Preferred
Stock issued by such Person, other than PIK Preferred Stock.
66
The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional
obligations as described above and, with respect to contingent
obligations, the maximum liability upon the occurrence of the
contingency giving rise to the obligation, provided
(A) that the amount outstanding at any time of any
Indebtedness issued with original issue discount is the face
amount of such Indebtedness less the remaining unamortized
portion of the original issue discount of such Indebtedness at
such time as determined in conformity with GAAP;
(B) that money borrowed and set aside at the time of the
Incurrence of any Indebtedness in order to prefund the payment
of the interest on such Indebtedness shall not be deemed to be
Indebtedness so long as such money is held to secure
the payment of such interest; and
(C) that Indebtedness shall not include:
(a) any liability for federal, state, local or other taxes;
(b) performance, surety or appeal bonds provided in the
ordinary course of business; or
(c) agreements providing for indemnification, adjustment of
purchase price or similar obligations, or Guarantees or letters
of credit, surety bonds or performance bonds securing any
obligations of the Company or any of its Restricted Subsidiaries
pursuant to such agreements, in any case Incurred in connection
with the disposition of any business, assets or Restricted
Subsidiary (other than Guarantees of Indebtedness Incurred by
any Person acquiring all or any portion of such business, assets
or Restricted Subsidiary for the purpose of financing such
acquisition), so long as the principal amount does not to exceed
the gross proceeds actually received by the Company or any
Restricted Subsidiary in connection with such disposition.
(d) obligations arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment
of purchase price or similar obligations, in each case, incurred
or assumed in connection with the disposition of any business,
assets or a Subsidiary, other than Guarantees of Indebtedness
Incurred by any Person acquiring all or any portion of such
business, assets or a Subsidiary for the purpose of financing
such acquisition;
(e) obligations arising from the honoring by a bank or
other financial institution of a check, draft or similar
instrument drawn against insufficient funds in the ordinary
course of business or other cash management services in the
ordinary course of business; provided, that (x) such
obligations (other than credit or purchase cards) are
extinguished within ten Business Days of notification to the
Company of its incurrence and (y) such obligations in
respect of credit or purchase cards is extinguished within
60 days from its incurrence; or
(f) obligations arising under one or more Securities
Facilities of Oppenheimer Multifamily Housing &
Healthcare Finance, Inc. and OPY Credit Corp.
Intercreditor Agreement has the meaning set
forth under section entitled Intercreditor Agreement
in this Description of the notes.
Interest Swap Obligations means the
obligations of any Person pursuant to any arrangement with any
other Person, whereby, directly or indirectly, such Person is
entitled to receive from time to time periodic payments
calculated by applying either a floating or a fixed rate of
interest on a stated notional amount in exchange for periodic
payments made by such other Person calculated by applying a
fixed or a floating rate of interest on the same notional amount
and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
Investment in any Person means any direct or
indirect advance, loan or other extension of credit (including,
without limitation, by way of Guarantee or similar arrangement;
but excluding Investment Securities, advances to customers or
suppliers or deposits in the ordinary course of business that
are, in conformity with GAAP, recorded as accounts receivable,
prepaid expenses or deposits on the balance sheet of the Company
or its Restricted Subsidiaries and endorsements for collection
or deposit arising in the ordinary course of business) or
capital contribution to (by means of any transfer of cash or
other property to others or
67
any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, bonds,
notes, debentures or other similar instruments issued by, such
Person and shall include (1) the designation of a
Restricted Subsidiary as an Unrestricted Subsidiary or as a
Regulated Subsidiary and (2) the retention of the Capital
Stock (or any other Investment) by the Company or any of its
Restricted Subsidiaries, of (or in) any Person that has ceased
to be a Restricted Subsidiary. For purposes of the definition of
Unrestricted Subsidiary and the Limitation on
Restricted Payments covenant, (a) the amount of or a
reduction in an Investment shall be equal to the fair market
value thereof at the time such Investment is made or reduced and
(b) in the event the Company or a Restricted Subsidiary
makes an Investment by transferring assets to any Person and as
part of such transaction receives Net Cash Proceeds, the amount
of such Investment shall be the fair market value of the assets
less the amount of Net Cash Proceeds so received, provided
the Net Cash Proceeds are applied in accordance with
clause (A) or (B) of the Limitation on Asset
Sales covenant.
Investment Grade Status shall occur when the
notes receive a rating of BBB- or higher from
S&P and a rating of Baa3 or higher from
Moodys, in each case with a stable or better outlook.
Investment Securities means any securities of
a Person (other than an Affiliate or joint venture of the
Company or any Restricted Subsidiary or any Regulated
Subsidiary), mortgages, credit card and other loan receivables,
futures contracts on any securities, interest rates and foreign
currencies used for the hedging of any securities, mortgages or
credit card and other loan receivables purchased, borrowed,
sold, loaned or pledged by such Person in the ordinary course of
its business.
Joinder Agreement means an agreement in form
and substance substantially similar to Exhibit A to the
Intercreditor Agreement, pursuant to which an additional Series
of Pari Passu Obligations become a party to the Intercreditor
Agreement, in accordance with the applicable terms thereof.
Lien means any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind (including,
without limitation, any conditional sale or other title
retention agreement or lease in the nature thereof or any
agreement to give any security interest).
Moodys means Moodys Investors
Service, Inc. and its successors.
Net Cash Proceeds means:
(a) with respect to any Asset Sale or Regulated Sale, the
proceeds of such Asset Sale or Regulated Sale in the form of
cash or cash equivalents, including payments in respect of
deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in
the form of cash or cash equivalents and proceeds from the
conversion of other property received when converted to cash or
cash equivalents, net of:
(1) brokerage commissions and other fees and expenses
(including attorneys fees, accountants fees,
underwriters, placement agents and other investment
bankers fees, commissions and consultant fees) related to
such Asset Sale or Regulated Sale;
(2) provisions for all taxes as a result of such Asset Sale
or Regulated Sale without regard to the consolidated results of
operations of the Company and its Restricted Subsidiaries, taken
as a whole, together with any actual distributions to
shareholders of the type contemplated under clause (b)(9) under
the covenant entitled Limitation on Restricted
Payments with respect to the taxable income relating to
such Asset Sale or Regulated Sale;
(3) payments made to repay Indebtedness or any other
obligation outstanding at the time of such Asset Sale or
Regulated Sale that either (x) is secured by a Lien on the
property or assets sold or (y) is required to be paid as a
result of such sale; and
(4) appropriate amounts to be provided by the Company, any
Restricted Subsidiary or any Regulated Subsidiary as a reserve
against any liabilities associated with such Asset Sale or
Regulated Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities
68
related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale or
Regulated Sale, all as determined in conformity with
GAAP; and
(b) with respect to any issuance or sale of Capital Stock,
the proceeds of such issuance or sale in the form of cash or
cash equivalents, including payments in respect of deferred
payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in
the form of cash or cash equivalents and proceeds from the
conversion of other property received when converted to cash or
cash equivalents, net of attorneys fees, accountants
fees, underwriters or placement agents fees,
discounts or commissions and brokerage, consultant and other
fees incurred in connection with such issuance or sale and net
of taxes paid or payable as a result thereof.
Non-Controlling Authorized Representative Enforcement
Date has the meaning set forth under
Inter-creditor Agreement Enforcement of
Security Interests.
Non-Controlling Secured Parties means the
Pari Passu Secured Parties that are not Controlling Secured
Parties.
Note Obligations means all Obligations in
respect of the notes or arising under the notes, the indenture
and the Subsidiary Guarantees. Note Obligations shall include
all interest accrued (or which would, absent the commencement of
an insolvency or liquidation proceeding, accrue) after the
commencement of an insolvency or liquidation proceeding in
accordance with and at the rate specified in the notes,
indenture or the Subsidiary Guarantees, as the case may be,
whether or not the claim for such interest is allowed as a claim
in such insolvency or liquidation proceeding.
Obligations means any principal, interest,
penalties, fees, indemnifications, reimbursements, damages and
other liabilities payable under the documentation governing any
Indebtedness.
Officer means the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Financial
Officer, any Executive Vice President, Senior Vice President or
Vice President, the Treasurer or the Secretary of the Company
or, in the event that a Person is a partnership or a limited
liability company that has no such officers, a person duly
authorized under applicable law by the general partner,
managers, members or a similar body to act on behalf of such
Person. Officer of any Subsidiary Guarantor has a correlative
meaning.
Officers Certificate means a
certificate signed by two Officers or by an Officer and either
an Assistant Treasurer or an Assistant Secretary of the Company.
Offer to Purchase means an offer to purchase
notes by the Company from the Holders commenced by mailing a
notice to the Trustee and each Holder stating:
(1) the covenant pursuant to which the offer is being made
and that all notes validly tendered will be accepted for payment
on a pro rata basis;
(2) the purchase price and the date of purchase (which
shall be a Business Day no earlier than 30 days nor later
than 60 days from the date such notice is mailed) (the
Payment Date);
(3) that any note not tendered will continue to accrue
interest and Additional Interest (if any) pursuant to its terms;
(4) that, unless the Company defaults in the payment of the
purchase price, any note accepted for payment pursuant to the
Offer to Purchase shall cease to accrue interest and Additional
Interest (if any) on and after the Payment Date;
(5) that Holders electing to have a note purchased pursuant
to the Offer to Purchase will be required to surrender the note,
together with the form entitled Option of the Holder to
Elect Purchase on the reverse side of the note completed,
to the Paying Agent at the address specified in the notice prior
to the close of business on the Business Day immediately
preceding the Payment Date;
(6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than the close
of business on the third Business Day immediately preceding the
Payment Date, a telegram, facsimile transmission or letter
setting forth the name of such Holder, the principal amount of
69
notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such notes purchased; and
(7) that Holders whose notes are being purchased only in
part will be issued new notes equal in principal amount to the
unpurchased portion of the notes surrendered; provided
that each note purchased and each new note issued shall be
in a principal amount of $2,000 or multiples of $1,000.
On the Payment Date, the Company shall (a) accept for
payment on a pro rata basis notes or portions thereof
tendered pursuant to an Offer to Purchase; (b) deposit with
the Paying Agent money sufficient to pay the purchase price of
all notes or portions thereof so accepted; and (c) deliver,
or cause to be delivered, to the Trustee all notes or portions
thereof so accepted together with an Officers Certificate
specifying the notes or portions thereof accepted for payment by
the Company. The Paying Agent shall promptly mail to the Holders
of notes so accepted payment in an amount equal to the purchase
price, and the Trustee shall promptly authenticate and mail to
such Holders a new note equal in principal amount to any
unpurchased portion of the note surrendered; provided
that each note purchased and each new note issued shall be
in a principal amount of $2,000 or multiples of $1,000. The
Company will publicly announce the results of an Offer to
Purchase as soon as practicable after the Payment Date. The
trustee shall act as the Paying Agent for an Offer to Purchase.
The Company will comply with
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations
are applicable, if the Company is required to repurchase notes
pursuant to an Offer to Purchase. The Company will comply with
the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations to the extent such laws or regulations are
applicable in connection with the repurchase of the notes
pursuant to an Asset Sale. To the extent that the provisions of
any securities laws or regulations conflict with the provisions
of the Indenture, the Company will comply with the applicable
securities laws and regulations and shall not be deemed to have
breached its obligations described in the Indenture by virtue
thereof.
Opinion of Counsel means a written opinion
from legal counsel who is reasonably acceptable to the Trustee.
The counsel may be an employee of or counsel to the Company.
Outstanding Amount means, with respect to the
indenture or any Pari Passu Agreement for any Series of Pari
Passu Obligations, at any time, an amount equal to the sum of
(without duplication) (i) with respect to the notes, the
aggregate outstanding principal amount at such time,
(ii) with respect to any other loans or other advances
outstanding under such Pari Passu Agreement at such time, the
aggregate outstanding principal amount thereof or, if such other
loans or advances outstanding under such Pari Passu Agreement
were issued with an original issue discount, the Accreted Value
thereof, in each case at such time, (iii) the aggregate
undrawn amount of all outstanding letters of credit to the
extent then available to be drawn and (iv) the aggregate
unexpired and uncanceled commitments to extend credit under such
Pari Passu Agreement at such time that, when funded, would
constitute Pari Passu Obligations.
Pari Passu Agreement means any loan
agreement, credit agreement, indenture or other agreement
entered into by the Company or any Subsidiary Guarantor after
the Closing Date, if any, pursuant to which the Company or any
Subsidiary Guarantor will incur Pari Passu Obligations.
Pari Passu Debt Collateral Agent has the
meaning set forth under section entitled Intercreditor
Agreement in this Description of the notes.
Pari Passu Lien Indebtedness means,
collectively, Indebtedness or other obligations in respect of
(i) the notes, the indenture and the Subsidiary Guarantees
and (ii) any Additional Notes and other Indebtedness or
other obligations having Pari Passu Lien Priority relative to
the notes with respect to the Collateral; provided that
the Authorized Representative in respect of such Indebtedness is
a party (directly or by through a Joinder Agreement) to the
Intercreditor Agreement.
Pari Passu Lien Priority means, relative to
specified Indebtedness, having (or purporting to have) a Lien
priority equal to that of the Lien securing the Notes
Obligations on the Collateral and subject to the Intercreditor
Agreement.
70
Pari Passu Obligations means, collectively,
Notes Obligations and each other Series of Permitted Pari Passu
Obligations.
Pari Passu Secured Parties means,
collectively, the Collateral Agent, the Notes Secured Parties
(as defined below in the definition of Series), any
secured parties holding any other Pari Passu Obligations, and
each agent and trustee for such holders.
Pari Passu Security Documents means each
security agreement, pledge agreement, deed of trust, mortgage
and other agreement entered into in favor of any Pari Passu Debt
Collateral Agent for purposes of securing the Pari Passu
Obligations and each financing statement and other document or
instrument delivered to create, perfect or continue the Liens
thereby created.
Permitted Holder means
(i) Mr. Albert Lowenthal, any current or former spouse
of his and any of their direct or indirect descendants and
immediate family, including by marriage, and (ii) trusts or
other investment vehicles controlled by or for the primary
benefit of persons referred to in clause (i).
Permitted Investment means:
(1) an Investment in the Company or a Restricted Subsidiary
or a Regulated Subsidiary or a Person which will, upon the
making of such Investment, become a Restricted Subsidiary or
Regulated Subsidiary or be merged or consolidated with or into
or transfer or convey all or substantially all its assets to,
the Company or a Restricted Subsidiary or Regulated Subsidiary;
provided that such persons primary business is a
Related Business on the date of such Investment;
provided, further, that the aggregate amount of
Investments made pursuant to this clause (1) in Restricted
Subsidiaries (net of return of capital) that are not Subsidiary
Guarantors shall not exceed $20.0 million;
(2) Temporary Cash Investments and Investment Securities;
(3) payroll, travel and similar advances to cover matters
that are expected at the time of such advances ultimately to be
treated as expenses in accordance with GAAP;
(4) stock, obligations or securities received in
satisfaction of judgments;
(5) an Investment in an Unrestricted Subsidiary consisting
solely of an Investment in another Unrestricted Subsidiary;
(6) Hedging Obligations not entered into for speculative
investment purposes and designed to protect the Company or its
Restricted Subsidiaries or Regulated Subsidiaries against
fluctuations in commodity prices, securities prices, foreign
currency exchange rates or interest rates;
(7) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant
to and in compliance with the Limitation on Asset
Sales covenant;
(8) any Investment existing on, or made pursuant to binding
commitments existing on, the date of the indenture;
(9) any Investment acquired by the Company or any of the
Restricted Subsidiaries (a) in exchange for any other
Investment or accounts receivable held by the Company or any
such Restricted Subsidiary in connection with or as a result of
a bankruptcy, workout, reorganization or recapitalization of the
Company of such other Investment or accounts receivable;
(b) as a result of a foreclosure by the Company or any of
the Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any
secured Investment in default; or (c) as a result of the
settlement, compromise or resolution of litigation, arbitration
or other disputes with Persons who are not Affiliates;
(10) Investments consisting of the licensing or
contribution of intellectual property pursuant to joint
marketing arrangements with other Persons;
(11) Guarantees issued in accordance with the covenants
described under Certain covenants Limitations
on Indebtedness and Issuance of Preferred Stock and
Certain covenants Future
Subsidiary Guarantees;
71
(12) Investments of a Restricted Subsidiary of the Company
acquired after the Closing Date or of an entity merged into or
consolidated with the Company or a Restricted Subsidiary in a
transaction that is not prohibited by the covenant described
under Consolidation; Merger and Sale of
Assets after the Closing Date to the extent that such
Investments were not made in contemplation of such acquisition,
merger or consolidation and were in existence on the date of
such acquisition, merger or consolidation;
(13) Investments made to defease the notes or the notes in
accordance with the terms of the indenture;
(14) guarantees by the Company or any of its Restricted
Subsidiaries of operating leases (other than Capitalized Lease
Obligations), trademarks, licenses, purchase agreements or of
other obligations that do not constitute Indebtedness, in each
case entered into by the Company or any Restricted Subsidiary in
the ordinary course of business;
(15) repurchases of the notes;
(16) Investment in general partner interests of limited
partnerships or as managing member of limited liability
companies in which non-Affiliates are the limited partners or
other members, as applicable, formed for the purpose of pursuing
private equity or alternative investment strategies in
connection with a Related Business and consistent with past
practice, not to exceed for any individual Investment, 2% of the
total amounts invested by all investors in such partnership or
limited liability company at the time of such Investment;
(17) Investments not otherwise described under this
definition, not to exceed $5 million in the aggregate for
the Company and its Subsidiaries; and
(18) guarantees by the Company or any Subsidiary Guarantor
of the obligations of Oppenheimer Multifamily
Housing & Healthcare Finance, Inc. under Securities
Facilities; provided that such guarantee is treated as
Indebtedness by the Company for purposes of determining
compliance with the Indenture.
Permitted Liens means:
(1) Liens for taxes, assessments, governmental charges or
claims that are being contested in good faith by appropriate
legal proceedings promptly instituted and diligently conducted
and for which a reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been
made;
(2) statutory and common law Liens of landlords and
carriers, warehousemen, mechanics, suppliers, materialmen,
repairmen or other similar Liens (including a lenders
unexercised rights of set-off) arising in the ordinary course of
business and with respect to amounts not yet delinquent or being
contested in good faith by appropriate legal proceedings
promptly instituted and diligently conducted and for which a
reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made;
(3) Liens incurred or deposits made in the ordinary course
of business in connection with workers compensation,
unemployment insurance and other types of social security;
(4) Liens incurred or deposits made to secure the
performance of tenders, bids, leases, statutory or regulatory
obligations, bankers acceptances, surety and appeal bonds,
government contracts, performance and
return-of-money
bonds and other obligations of a similar nature incurred in the
ordinary course of business (exclusive of obligations for the
payment of borrowed money);
(5) easements,
rights-of-way,
municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not
materially interfere with the ordinary course of business of the
Company or any of its Restricted Subsidiaries;
(6) leases or subleases granted to others that do not
materially interfere with the ordinary course of business of the
Company and its Restricted Subsidiaries, taken as a whole;
72
(7) Liens encumbering property or assets under construction
arising from progress or partial payments by a customer of the
Company or its Restricted Subsidiaries relating to such property
or assets;
(8) any interest or title of a lessor in the property
subject to any Capitalized Lease or operating lease;
(9) Liens arising from filing Uniform Commercial Code
financing statements regarding leases;
(10) Liens on property of, or on shares of Capital Stock or
Indebtedness of, any Person existing at the time such Person
becomes, or becomes a part of, any Restricted Subsidiary;
provided that such Liens do not extend to or cover any
property or assets of the Company or any Restricted Subsidiary
other than the property or assets acquired;
(11) Liens in favor of the Company or any Restricted
Subsidiary;
(12) Liens arising from the rendering of a final judgment
or order against the Company or any Restricted Subsidiary that
does not give rise to an Event of Default;
(13) Liens securing reimbursement obligations with respect
to letters of credit that encumber documents and other property
relating to such letters of credit and the products and proceeds
thereof;
(14) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties
in connection with the importation of goods;
(15) Liens encumbering customary initial deposits and
margin deposits, and other Liens that are within the general
parameters customary in the industry and incurred in the
ordinary course of business, in each case, securing Indebtedness
under Hedging Obligations not entered into for speculative
investment purposes and designed to protect the Company or any
of its Restricted Subsidiaries from fluctuations in interest
rates, currencies or the price of commodities or securities;
(16) Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale of
goods entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business in accordance
with the past practices of the Company and its Restricted
Subsidiaries prior to the Closing Date;
(17) Liens on shares of Capital Stock of any Unrestricted
Subsidiary to secure Indebtedness of such Unrestricted
Subsidiary;
(18) Liens on or sales of receivables or mortgages;
(19) Liens existing on the Closing Date;
(20) Liens on Collateral securing Notes Obligations;
(21) Liens with respect to the assets of a Restricted
Subsidiary granted by such Restricted Subsidiary to the Company
or a Wholly Owned Restricted Subsidiary or Wholly Owned
Regulated Subsidiary to secure Indebtedness owing to the Company
or such other Restricted Subsidiary or Regulated Subsidiary;
(22) Liens to secure Indebtedness of the Company under any
Credit Facility Incurred pursuant to and outstanding under
clause (1) of the second paragraph of the Limitation
on Indebtedness and Issuances of Preferred Stock;
(23) Liens securing Indebtedness which is Incurred to
refinance secured Indebtedness which is permitted to be Incurred
under clause (6) of the second paragraph of the
Limitation on Indebtedness and Issuances of Preferred
Stock covenant; provided that such Liens do not
extend to or cover any property or assets of the Company or any
Restricted Subsidiary or Regulated Subsidiary other than the
property or assets securing the Indebtedness being refinanced;
(24) Liens to secure Indebtedness under clauses
(11)(limited to the assets of the Foreign Subsidiary incurring
such Indebtedness) and (12) of the Limitation on
Indebtedness and Issuances of Preferred Stock covenant;
73
(25) Liens securing Indebtedness under clause (4) of
the second paragraph under the Limitation on Indebtedness
and Issuances of Preferred Stock covenant; provided
that (x) such Liens are created within 360 days
after the acquisition of the asset financed and (y) no such
Lien shall extend to or cover any property or asset other than
the asset so financed;
(26) Liens on cash set aside at the time of the Incurrence
of any Indebtedness, or government securities purchased with
such cash, in either case to the extent that such cash or
government securities pre-fund the payment of interest on such
Indebtedness and are held in a collateral or escrow account or
similar arrangement to be applied for such purpose;
(27) Liens (which may be pari passu with the Liens securing
the notes) securing any Indebtedness permitted to be incurred
pursuant to the covenant described under Limitation on
Indebtedness and Issuances of Preferred Stock; provided
that at the time of incurrence and after giving pro forma
effect thereto, the Secured Leverage Ratio would be no
greater than 1.60 to 1.
(28) Liens to secure any refinancing, refunding, extension,
renewal or replacement (or successive refinancings, refundings,
extensions, renewals or replacements) as a whole, or in part, of
any Indebtedness secured by any Lien referred to in the
foregoing clauses (10) and (19); provided,
however, that (x) such new Lien shall be limited to
all or part of the same property that secured the original Lien
(plus improvements on such property), (y) the Indebtedness
secured by such Lien at such time is not increased to any amount
greater than the sum of (A) the outstanding principal
amount or, if greater, committed amount of the Indebtedness
described under clause (10) and (19) at the time the
original Lien became a Permitted Lien under the Indenture, and
(B) an amount necessary to pay any fees and expenses,
including premiums, related to such refinancing, refunding,
extension, renewal or replacement and (z) the new Lien has
no greater priority relative to the notes and the Guarantees and
the holders of the Indebtedness secured by such Lien have no
greater intercreditor rights relative to the notes and the
Guarantees and holders thereof than the original Liens and the
related Indebtedness;
(29) Liens on assets of a Restricted Subsidiary securing
obligations of such Restricted Subsidiary under a Securities
Facility; and
(30) other Liens securing obligations not to exceed
$5.0 million at any one time outstanding.
Permitted Pari Passu Obligations means any
Obligation under any Additional Notes or any other Indebtedness
(whether or not consisting of Additional Notes) constituting
Pari Passu Lien Indebtedness; provided that any such
Lien, as of the date of incurrence of such Permitted Pari Passu
Obligations, was permitted to be incurred under clause (27)
of the definition of Permitted Liens.
Person means an individual, a corporation, a
partnership, a limited liability company, an association, a
trust or any other entity or organization, including a
government or political subdivision or an agency or
instrumentality thereof.
PIK Preferred Stock means Preferred Stock the
terms of which do not permit the declaration or payment of any
dividend or other distribution thereon or with respect thereto,
or the redemption or conversion thereof, in each such case prior
to the payment in full of the Companys obligations under
the notes.
Preferred Stock of any Person means any
Capital Stock of such Person that has preferential rights to any
other Capital Stock of such Person with respect to dividends or
redemptions or upon liquidation.
pro forma means pro forma presentation
in accordance with GAAP and
Regulation S-X
promulgated under the Securities Act or any other regulation or
policy of the SEC related thereto.
Rating Agency means any nationally
recognized statistical rating organization, as such term
is defined for purposes of Rule 436(g)(2) under the
Securities Act.
Registration Rights Agreement means the
registration rights agreement the Company, the Subsidiary
Guarantors and the initial purchasers enter into in connection
with the notes.
74
Regulated Sale means any sale, transfer or
other disposition (including by way of merger, consolidation or
Sale-Leaseback Transaction) in one transaction or a series of
related transactions by the Company or any of its Restricted
Subsidiaries or Regulated Subsidiaries to any Person other than
the Company or any of its Restricted Subsidiaries or Regulated
Subsidiaries of:
(1) all or any of the Capital Stock of any Regulated
Subsidiary; or
(2) all or substantially all of the property and assets of
an operating unit or business of any Regulated Subsidiary;
in each case, that is not governed by the provisions of the
Indenture applicable to mergers, consolidations and sales of
assets of the Company; provided that Regulated
Sale shall not include an issuance, sale, transfer or
other disposition of Capital Stock by a Regulated Subsidiary to
the Company, a Wholly Owned Restricted Subsidiary or a Wholly
Owned Regulated Subsidiary.
Regulated Significant Subsidiary means, at
any date of determination, any Regulated Subsidiary that,
together with its Subsidiaries, (1) for the most recent
fiscal year of the Company, accounted for more than 5% of the
consolidated revenues of the Company and its Restricted
Subsidiaries and Regulated Subsidiaries or (2) as of the
end of such fiscal year, was the owner of more than 5% of the
consolidated assets of the Company and its Restricted
Subsidiaries and Regulated Subsidiaries, all as set forth on the
most recently internally available consolidated financial
statements of the Company for such fiscal year.
Regulated Subsidiary means any direct or
indirect subsidiary of the Company that is registered as
(1) a broker dealer pursuant to Section 15 of the
Exchange Act, (2) a broker dealer or underwriter under any
foreign securities law, or (3) a banking or insurance
Subsidiary regulated under state, federal or foreign laws.
Related Business means any financial services
business which is the same as or ancillary or complementary to
any business of the Company and its Restricted Subsidiaries and
Regulated Subsidiaries that is being conducted on the Closing
Date, including, but not limited to, broker-dealer services,
insurance, investment advisory services, specialist and other
market making activities, trust and banking services,
underwriting and the creation of and offers and sales of
interests in mutual funds and any business that is a result of
ownership interest in any other entity acquired in the ordinary
course of business.
Replacement Assets means, on any date,
property or assets (other than current assets) of a nature or
type or that are used in a business (or an Investment in a
company having property or assets of a nature or type, or
engaged in a business) similar or related to the nature or type
of the property and assets of, or the business of, the Company
and its Restricted Subsidiaries and its Regulated Subsidiaries
existing on such date.
Restricted Subsidiary means any Subsidiary of
the Company other than an Unrestricted Subsidiary or a Regulated
Subsidiary.
Sale-Leaseback Transaction means, with
respect to any Person, an arrangement whereby such Person sells
or transfers property and then or thereafter leases such
property or any substantial part thereof which such Person
intends to use for substantially the same purpose or purposes as
the property sold or transferred, provided that for
purposes of this definition, property shall not
include Investment Securities.
S&P means Standard &
Poors Ratings Group, a division of The McGraw-Hill
Companies, and its successors.
Secured Leverage Ratio means as of any date
of determination, the ratio of (a) Pari Passu Lien
Indebtedness, as determined on a consolidated basis, as of the
last day of the fiscal quarter ending on, or most recently ended
prior to, such date of determination to, after giving effect to
the transaction giving rise to the need to calculate the Secured
Leverage Ratio to (b) Consolidated EBITDA for the period
consisting of the immediately preceding four consecutive fiscal
quarters of the Company ending on, or most recently ended prior
to, such date of determination for which internal financial
statements are available; provided that Consolidated
EBITDA will be calculated in the manner contemplated by, and
subject to all the adjustments provided in, the definition of
Consolidated Fixed Charge Coverage Ratio.
75
Secured Party means (i) the Holders,
(ii) the Trustee, (iii) the Collateral Agent and
(iv) any successors, indorsees, transferees and assigns of
each of the foregoing.
Securities Facilities means any facility
providing for securities lending or to finance the purchase or
carrying of inventories of mortgage or other loans or securities
in connection with a Related Business carried on by a Restricted
Subsidiary and where the recourse of the lenders or other
creditors under such facility is limited to the assets of such
Restricted Subsidiary or to guarantees of such Securities
Facilities by the Company or a Subsidiary Guarantor permitted
under the Indenture.
Security Documents means the Security
Agreement, the Intercreditor Agreement and any other instruments
and documents executed and delivered pursuant to the Indenture
or any of the foregoing, as the same may be amended,
supplemented or otherwise modified from time to time and
pursuant to which Collateral is pledged, assigned or granted to
or on behalf of the Collateral Agent for the benefit of the
Secured Parties.
Senior Management means with respect to any
Person, the Chief Executive Officer, the President, the Chief
Operating Officer, the Chief Financial Officer, or any Executive
Vice-President of such Person.
Series means (a) with respect to the
Pari Passu Secured Parties, (i) the Holders of the notes
and the Trustee (in their capacities as such, the Notes
Secured Parties) and (ii) the Pari Passu Secured
Parties that become subject to the Intercreditor Agreement after
the Closing Date and that are represented by a common Authorized
Representative; and (b) with respect to any Pari Passu
Obligations, each of the Notes Obligations, and the Pari Passu
Obligations incurred pursuant to any applicable agreement,
which, in each case, pursuant to the Intercreditor Agreement or
a Joinder Agreement, are to be represented under the
Intercreditor Agreement by an Authorized Representative.
Significant Subsidiary means, at any date of
determination, any Restricted Subsidiary that, together with its
Subsidiaries, (1) for the most recent fiscal year of the
Company, accounted for more than 10% of the consolidated
revenues of the Company and its Restricted Subsidiaries or
(2) as of the end of such fiscal year, was the owner of
more than 10% of the consolidated assets of the Company and its
Restricted Subsidiaries, all as set forth on the most recently
internally available consolidated financial statements of the
Company for such fiscal year.
Standard Securitization Undertakings means
representations, warranties, covenants and indemnities entered
into by the Company or any of its Restricted Subsidiaries that
are reasonably customary in an accounts receivable transaction.
Stated Maturity means, (1) with respect
to any debt security, the date specified in such debt security
as the fixed date on which the final installment of principal of
such debt security is due and payable and (2) with respect
to any scheduled installment of principal of or interest on any
debt security, the date specified in such debt security as the
fixed date on which such installment is due and payable.
Subsidiary means, with respect to any Person,
any corporation, association or other business entity of which
more than 50% of the voting power of the outstanding Voting
Stock is owned, directly or indirectly, by such Person and one
or more other Subsidiaries of such Person and is consolidated
under GAAP with such Person.
Subsidiary Guarantee means any Guarantee of
the obligations of the Company under the Indenture and the notes
by any Subsidiary Guarantor.
Subsidiary Guarantor means E.A. Viner
International Co., Viner Finance Inc. and any Subsidiary of the
Company required to guarantee the notes pursuant to the covenant
Future Subsidiary Guarantees.
Temporary Cash Investment means any of the
following:
(1) direct obligations of the United States of America or
any agency thereof or obligations fully and unconditionally
guaranteed by the United States of America or any agency
thereof, in each case maturing within two years from the date of
acquisition thereof;
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(2) certificates of deposit, time deposits and eurodollar
time deposits with maturities of one year or less from the date
of acquisition thereof, bankers acceptances, in each case
with maturities not exceeding one year and overnight bank
deposits, in each case with any commercial bank having capital
and surplus in excess of $250.0 million and whose long-term
debt is rated A or the equivalent thereof by
Moodys or S&P (or reasonably equivalent ratings of
another internationally recognized ratings agency);
(3) repurchase obligations with a term of not more than
30 days for underlying securities of the types described in
clause (1) above entered into with a bank or trust company
meeting the qualifications described in clause (2) above;
(4) commercial paper, maturing not more than one year after
the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the
laws of the United States of America, any state thereof or any
foreign country recognized by the United States of America with
a rating at the time as of which any investment therein is made
of
P-1
(or higher) according to Moodys or
A-1
(or higher) according to S&P;
(5) readily marketable direct obligations issued by any
state of the United States of America or any political
subdivision thereof having one of the two highest rating
categories obtainable from either Moodys or S&P (or
reasonably equivalent ratings of another internationally
recognized ratings agency if both of the two named rating
agencies cease publishing ratings of investments) in each case
with maturities not exceeding two years from the date of
acquisition;
(6) Indebtedness issued by Persons (other than the
Permitted Holders or any of their Affiliates) with a rating of
A or higher from S&P or
A-2
or higher from Moodys (or reasonably equivalent ratings of
another internationally recognized ratings agency) in each case
with maturities not exceeding two years from the date of
acquisition;
(7) any investment funds investing at least 95% of its
assets continuously invested in investments of the types
described in clauses (1) through (6) above; and
(8) instruments equivalent to those referred to in
clauses (1) through (6) above denominated in euros or
any other foreign currency comparable in credit quality and
tenor to those referred to above and commonly used by
corporations for cash management purposes in any jurisdiction
outside the United States to the extent reasonably required
in connection with any business conducted by any Subsidiary
organized in such jurisdiction.
Total Assets means the total consolidated
assets of the Company, the Restricted Subsidiaries and the
Regulated Subsidiaries, as shown on the most recent balance
sheet of the Company.
Trade Payables means, with respect to any
Person, any accounts payable or any other indebtedness or
monetary obligation to trade creditors created, assumed or
Guaranteed by such Person or any of its Subsidiaries arising in
the ordinary course of business in connection with the
acquisition of goods or services.
Transaction Date means, with respect to the
Incurrence of any Indebtedness, the date such Indebtedness is to
be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
Treasury Rate means, as of the applicable
redemption date, the yield to maturity as of such redemption
date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal
Reserve Statistical Release H.15 (519) that has become
publicly available at least two business days prior to such
redemption date (or, if such Statistical Release is no longer
published, any publicly available source of similar market
data)) most nearly equal to the period from such redemption date
to April 15, 2014; provided, however, that if
the period from such redemption date to April 15, 2014 is
less than one year, the weekly average yield on actually traded
United States Treasury securities adjusted to a constant
maturity of one year will be used.
Uniform Commercial Code or
UCC means the New York Uniform Commercial
Code as in effect from time to time, provided that, if
perfection or the effect of perfection or non-perfection or the
priority of
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any security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, Uniform Commercial
Code or UCC means the Uniform
Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to
such perfection, effect of perfection or non-perfection or
priority.
Unrestricted Subsidiary means (1) any
Subsidiary of the Company that at the time of determination
shall be designated an Unrestricted Subsidiary by the Board of
Directors in the manner provided below; and (2) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors
may designate any Restricted Subsidiary or Regulated Subsidiary
(including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary
owns any Capital Stock of, or owns or holds any Lien on any
property of, the Company or any Restricted Subsidiary;
provided that (A) any Guarantee by the Company or
any Restricted Subsidiary of any Indebtedness of the Subsidiary
being so designated shall be deemed an Incurrence of
such Indebtedness and an Investment by the Company
or such Restricted Subsidiary (or both, if applicable) at the
time of such designation; (B) either (I) the
Subsidiary to be so designated has total assets of $1,000 or
less or (II) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under the
Limitation on Restricted Payments covenant and
(C) if applicable, the Incurrence of Indebtedness and the
Investment referred to in clause (A) of this proviso would
be permitted under the Limitation on Indebtedness and
Issuance of Preferred Stock and Limitation on
Restricted Payments covenants. The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that (a) no Default or Event of
Default shall have occurred and be continuing at the time of or
after giving effect to such designation and (b) all Liens
and Indebtedness of such Unrestricted Subsidiary outstanding
immediately after such designation would, if Incurred at such
time, have been permitted to be Incurred (and shall be deemed to
have been Incurred) for all purposes of the Indenture. Any such
designation by the Board of Directors shall be evidenced to the
Trustee by promptly filing with the Trustee a copy of the Board
Resolution giving effect to such designation and an
Officers Certificate certifying that such designation
complied with the foregoing provisions.
Voting Stock means with respect to any
Person, Capital Stock of any class or kind ordinarily having the
power to vote for the election of directors, managers or other
voting members of the governing body of such Person.
Wholly Owned means, with respect to any
Subsidiary of any Person, the ownership all of the outstanding
Capital Stock of such Subsidiary by such Person or one or more
Wholly Owned Subsidiaries of such Person.
Voting Stock of an entity means all classes
of Equity Interests of such entity then outstanding and normally
entitled to vote in the election of directors or all interests
in such entity with the ability to control the management or
actions of such entity.
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BOOK-ENTRY
DELIVERY AND FORM
General
The notes are represented by one or more global notes in
registered form without interest coupons attached (collectively,
the Global Notes). Global Notes have been deposited
with the Trustee as custodian for The Depository
Trust Company (DTC) in New York, New York, and
registered in the name of DTC or its nominee, in each case for
credit to an account of a direct or indirect participant in DTC
as described below. Except as set forth below, Global Notes may
be transferred only to another nominee of DTC or to a successor
of DTC or its nominee, in whole and not in part. Except in the
limited circumstances described below, beneficial interests in
Global Notes may not be exchanged for notes in certificated form
and owners of beneficial interests in Global Notes will not be
entitled to receive physical delivery of notes in certificated
form. See Exchange of Global Notes for
Certificated Notes.
Depository
Procedures
The following description of the operations and procedures of
DTC, Euroclear and Clearstream is provided solely as a matter of
convenience. These operations and procedures are solely within
the control of the respective settlement systems and are subject
to changes by them. The Company takes no responsibility for
these operations and procedures and urges investors to contact
the system or their participants directly to discuss these
matters.
DTC has advised the Company that DTC is a limited-purpose trust
company organized under the laws of the State of New York, a
banking organization within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a
clearing corporation within the meaning of the New
York Uniform Commercial Code and a clearing agency
registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its
participating organizations (collectively, the
Participants) and to facilitate the clearance and
settlement of transactions in those securities between
Participants through electronic book-entry changes in accounts
of its Participants. The Participants include securities brokers
and dealers, banks, trust companies, clearing corporations and
certain other organizations. Access to DTCs system is also
available to other entities such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly
(collectively, the Indirect Participants). Persons
who are not Participants may beneficially own securities held by
or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interests in, and transfers
of ownership interests in, each security held by or on behalf of
DTC are recorded on the records of the Participants and Indirect
Participants.
DTC has also advised the Company that, pursuant to procedures
established by it:
(1) upon deposit of the Global Notes for a series of notes,
DTC will credit the accounts of Participants with portions of
the principal amount of the Global Notes for such
series; and
(2) ownership of these interests in Global Notes will be
shown on, and the transfer of ownership of these interests will
be effected only through, records maintained by DTC (with
respect to the Participants) or by the Participants and the
Indirect Participants (with respect to other owners of
beneficial interests in Global Notes).
All interests in a Global Note may be subject to the procedures
and requirements of DTC. Interests in a Global Note held through
Euroclear or Clearstream may be subject to the procedures and
requirements of those systems as well. The laws of some states
require that certain persons take physical delivery in
definitive form of securities that they own and the ability to
transfer beneficial interests in a Global Note to Persons that
are subject to those requirements will be limited to that
extent. Because DTC can act only on behalf of Participants,
which in turn act on behalf of Indirect Participants, the
ability of a person having beneficial interests in a Global Note
to pledge those interests to Persons that do not participate in
the DTC system, or otherwise take actions in respect of those
interests, may be affected by the lack of a physical certificate
evidencing those interests.
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Except as described below, owners of an interest in Global Notes
will not have notes registered in their names, will not receive
physical delivery of definitive notes in registered certificated
form (Certificated Notes) and will not be considered
the registered owners or Holders thereof under the
indentures governing the notes for any purpose.
Payments in respect of the principal of and premium, interest
and special interest, if any, on a Global Note registered in the
name of DTC or its nominee will be payable to DTC in its
capacity as the registered Holder under the applicable
indenture. Under the terms of each indenture, the Company and
the Trustee will treat the Persons in whose names notes,
including Global Notes, are registered as the owners of such
notes for the purpose of receiving payments and for all other
purposes. Consequently, none of the Company, the Trustee or any
agent of the Company or the Trustee has or will have any
responsibility or liability for:
(1) any aspect of DTCs records or any
Participants or Indirect Participants records
relating to or payments made on account of beneficial ownership
interests in Global Notes or for maintaining, supervising or
reviewing any of DTCs records or any Participants or
Indirect Participants records relating to the beneficial
ownership interests in Global Notes; or
(2) any other matter relating to the actions and practices
of DTC or any of its Participants or Indirect Participants.
DTC has advised the Company that its current practice, upon
receipt of any payment in respect of securities such as the
notes (including principal and interest), is to credit the
accounts of the relevant Participants with the payment on the
payment date unless DTC has reason to believe it will not
receive payment on that payment date. Each relevant Participant
is credited with an amount proportionate to its beneficial
ownership of an interest in the principal amount of the relevant
security as shown on the records of DTC. Payments by the
Participants and the Indirect Participants to the beneficial
owners of notes will be governed by standing instructions and
customary practices and will be the responsibility of the
Participants or the Indirect Participants and will not be the
responsibility of DTC, the Trustee or the Company. Neither the
Company nor the Trustee will be liable for any delay by DTC or
any of its Participants in identifying the beneficial owners of
any notes, and the Company and the Trustee may conclusively rely
on and will be protected in relying on instructions from DTC or
its nominee for all purposes.
Transfers between Participants in DTC will be effected in
accordance with DTCs procedures, and will be settled in
same-day
funds and transfers between participants in Euroclear and
Clearstream will be effected in accordance with their respective
rules and operating procedures.
Cross-market transfers between the Participants, on the one
hand, and Euroclear or Clearstream participants, on the other
hand, will be effected through DTC in accordance with DTCs
rules on behalf of Euroclear or Clearstream, as the case may be,
by its respective depositary; however, such cross-market
transactions will require delivery of instructions to Euroclear
or Clearstream, as the case may be, by the counterparty in such
system in accordance with the rules and procedures and within
the established deadlines (Brussels time) of such system.
Euroclear or Clearstream, as the case may be, will, if the
transaction meets its settlement requirements, deliver
instructions to its respective depositary to take action to
effect final settlement on its behalf by delivering or receiving
interests in the relevant Global Note from DTC, and making or
receiving payment in accordance with normal procedures for
same-day
funds settlement applicable to DTC. Euroclear participants and
Clearstream participants may not deliver instructions directly
to the depositories for Euroclear or Clearstream.
DTC has advised the Company that it will take any action
permitted to be taken by a Holder of a given series of notes
only at the direction of one or more Participants to whose
account DTC has credited the interests in the applicable series
of Global Notes and only in respect of the portion of the
aggregate principal amount of the applicable series of notes as
to which that Participant or those Participants has or have
given the relevant direction. However, if there is an Event of
Default under such series of notes, DTC reserves the right to
exchange the applicable Global Notes for legended notes in
certificated form, and to distribute those notes to its
Participants.
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Although DTC, Euroclear and Clearstream have agreed to the
foregoing procedures in order to facilitate transfers of
interests in Global Notes among Participants, they are under no
obligation to perform those procedures, and may discontinue or
change those procedures at any time. None of the Company, the
Trustee or any of their respective agents will have any
responsibility for the performance by DTC, Euroclear,
Clearstream or their respective Participants or Indirect
Participants of their respective obligations under the rules and
procedures governing their operations.
Exchange
of Global Notes for Certificated Notes
A Global Note is exchangeable for a Certificated Note of the
same series if:
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DTC (a) notifies the Company that it is unwilling or unable
to continue as depositary for the applicable Global Notes or
(b) has ceased to be a clearing agency registered under the
Exchange Act and, in each case, a successor depositary is not
appointed within 90 days of such notice or
cessation; or
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the Company, at its option, notifies the Trustee in writing that
it elects to cause the issuance of Certificated Notes; or
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there has occurred and is continuing an Event of Default with
respect to the notes.
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In addition, beneficial interests in a Global Note may be
exchanged for Certificated Notes of the same series upon prior
written notice given to the Trustee by or on behalf of DTC in
accordance with the applicable Indenture. In all cases,
Certificated Notes delivered in exchange for any Global Note or
beneficial interests in a Global Note will be registered in the
names, and issued in any approved denominations, requested by or
on behalf of the depositary (in accordance with its customary
procedures).
Same Day
Settlement and Payment
The Company will make payments in respect of the notes
represented by the Global Notes (including principal, premium,
if any, interest and Special Interest, if any) by wire transfer
of immediately available funds to the accounts specified by DTC
or its nominee. The Company will make all payments of principal,
interest and premium, if any, and Special Interest, if any, with
respect to Certificated Notes by wire transfer of immediately
available funds to the accounts specified by the holders of the
Certificated Notes or, if no such account is specified, by
mailing a check to each such holders registered address.
The notes represented by the Global Notes are expected to be
eligible to trade in DTCs
Same-Day
Funds Settlement System, and any permitted secondary market
trading activity in such notes will, therefore, be required by
DTC to be settled in immediately available funds. The Company
expects that secondary trading in any Certificated Notes will
also be settled in immediately available funds.
Because of time zone differences, the securities account of a
Euroclear or Clearstream participant purchasing an interest in a
Global Note from a Participant will be credited, and any such
crediting will be reported to the relevant Euroclear or
Clearstream participant, during the securities settlement
processing day (which must be a business day for Euroclear and
Clearstream) immediately following the settlement date of DTC.
DTC has advised the Company that cash received in Euroclear or
Clearstream as a result of sales of interests in a Global Note
by or through a Euroclear or Clearstream participant to a
Participant will be received with value on the settlement date
of DTC but will be available in the relevant Euroclear or
Clearstream cash account only as of the business day for
Euroclear or Clearstream following DTCs settlement date.
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CERTAIN
U.S. FEDERAL TAX CONSEQUENCES TO
NON-U.S.
HOLDERS
The following is a summary of certain United States federal
income tax consequences of the purchase, ownership and
disposition of the notes as of the date of this prospectus. This
discussion is based upon the Internal Revenue Code of 1986, as
amended (the Code), Treasury Regulations and
judicial decisions and administrative interpretations thereof,
all as of the date hereof and all of which are subject to
change, possibly with retroactive effect. This discussion is
limited to investors that hold the notes as capital assets for
U.S. federal income tax purposes. Furthermore, this
discussion does not address all aspects of U.S. federal
income taxation that may be applicable to investors in light of
their particular circumstances, or to investors subject to
special treatment under U.S. federal income tax law, such
as banks, financial institutions, insurance companies,
tax-exempt organizations, entities that are treated as
partnerships for U.S. federal income tax purposes, brokers
or dealers in securities or currencies, expatriates, persons
deemed to sell the notes under the constructive sale provisions
of the Code and persons that hold the notes as part of a
straddle, hedge, conversion transaction or other integrated
investment. Furthermore, this discussion does not address any
U.S. federal estate or gift tax consequences or any state,
local or foreign tax consequences. You are urged to consult your
tax advisors regarding the U.S. federal, state, local and
foreign income and other tax consequences of the purchase,
ownership and disposition of the notes.
For purposes of this summary, the term United States
Holder means a beneficial owner of a note that is, for
U.S. federal income tax purposes (i) an individual
that is a citizen or resident of the United States, (ii) a
corporation, or other entity treated as a corporation for
U.S. federal income tax purposes, that is created or
organized under the laws of the United States, any of the States
or the District of Columbia, (iii) an estate the income of
which is subject to U.S. federal income taxation regardless
of its source, or (iv) a trust (A) if a court within
the United States is able to exercise primary control over its
administration and one or more U.S. persons have the
authority to control all substantial decisions of such trust, or
(B) that has made a valid election to be treated as a
U.S. person for U.S. federal income tax purposes. The
term
Non-United
States Holder means a beneficial owner of a note (other
than a partnership or any other entity treated as a partnership
for United States federal income tax purposes) that is not a
United States Holder.
If a partnership (including any entity or arrangement treated as
a partnership for U.S. federal income tax purposes) owns
notes, the tax treatment of a partner in the partnership will
depend upon the status of the partner and the activities of the
partnership. Partners in a partnership that owns the notes
should consult their tax advisors as to the particular
U.S. federal income tax consequences applicable to them.
Consequences
to United States Holders
The following is a summary of certain United States federal
income tax consequences that will apply to you if you are a
United States Holder of notes.
Payments
of Interest
Interest on a note will generally be taxable to you as ordinary
income at the time it is paid or accrued in accordance with your
method of accounting for United States federal income tax
purposes.
Market
Discount
If you purchase a note for an amount that is less than its
principal amount, the amount of the difference will be treated
as market discount for United States federal income
tax purposes, unless that difference is less than a specified de
minimis amount. Under the market discount rules, you will be
required to treat any principal payment on, or any gain on the
sale, exchange, retirement or other disposition of, a note as
ordinary income to the extent of the market discount that you
have not previously included in income and are treated as having
accrued on the note at the time of the payment or disposition.
In addition, you may be required to defer, until the maturity of
the note or its earlier disposition in a taxable transaction,
the deduction of all or a portion of the interest expense on any
indebtedness attributable to
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the note. You may elect, on a
note-by-note
basis, to deduct the deferred interest expense in a tax year
prior to the year of disposition. You should consult your tax
advisors before making this election.
Any market discount will be considered to accrue ratably during
the period from the date of acquisition to the maturity date of
the note, unless you elect to accrue on a constant interest
method. You may elect to include market discount in income
currently as it accrues, on either a ratable or constant
interest method, in which case the rule described above
regarding deferral of interest deductions will not apply.
Amortizable
Bond Premium
If you purchase a note for an amount in excess of its principal
amount, you will be considered to have purchased the note at a
premium. You generally may elect to amortize the
premium over the remaining term of the note on a constant yield
method as an offset to interest when includible in income under
your regular accounting method. If you do not elect to amortize
bond premium, that premium will decrease the gain or increase
the loss you would otherwise recognize on disposition of the
note.
Sale,
Exchange and Retirement of Notes
Your tax basis in a note generally will be your cost for that
note, increased by market discount that you previously included
in income, and reduced by any amortized premium and any cash
payments on the note other than stated interest. Upon the sale,
exchange, retirement or other disposition of a note, you will
recognize gain or loss equal to the difference between the
amount you realize upon the sale, exchange, retirement or other
disposition (less an amount equal to any accrued interest, which
will be taxable as interest income to the extent not previously
included in income) and the tax basis of the note. Except as
described above with respect to market discount, such gain or
loss will generally be capital gain or loss. Capital gains of
individuals derived in respect of capital assets held for more
than one year are eligible for reduced rates of taxation. The
deductibility of capital losses is subject to certain
limitations.
Consequences
to
Non-United
States Holders
The following is a summary of certain United States federal
income tax consequences that will apply to you if you are a
Non-United
States Holder of notes.
United
States Federal Withholding Tax
The 30% United States federal withholding tax will not apply to
any payment of interest on the notes, provided that:
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interest paid on the notes is not effectively connected with
your conduct of a trade or business in the United States;
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you do not actually (or constructively) own 10% or more of the
total combined voting power of all classes of our voting stock
within the meaning of the Code and applicable United States
Treasury Regulations;
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you are not a controlled foreign corporation that is related,
directly or indirectly, to us through stock ownership;
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you are not a bank whose receipt of interest on the notes is
described in Section 881(c)(3)(A) of the Code; and
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either (a) you provide your name and address on an Internal
Revenue Service (IRS) Form
W-8BEN (or
other applicable form), and certify, under penalties of perjury,
that you are not a United States person as defined under the
Code or (b) you hold your notes through certain foreign
intermediaries and satisfy the certification requirements of
applicable United States Treasury regulations.
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Special certification rules apply to
Non-United
States Holders that are pass-through entities rather than
corporations or individuals.
83
If you cannot satisfy the requirements described above, payments
of interest made to you will be subject to the 30% United States
federal withholding tax, unless you provide us with a properly
executed:
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IRS
Form W-8BEN
(or other applicable form) claiming an exemption from or
reduction in withholding under the benefit of an applicable
income tax treaty; or
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IRS
Form W-8ECI
(or other applicable form) stating that interest paid on the
notes is not subject to withholding tax because it is
effectively connected with your conduct of a trade or business
in the United States (as discussed below under United
States Federal Income Tax).
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The 30% United States federal withholding tax generally will not
apply to any payment of principal or gain that you realize on
the sale, exchange, retirement or other disposition of a note.
United
States Federal Income Tax
If you are engaged in a trade or business in the United States
and interest on the notes is effectively connected with the
conduct of that trade or business (and, if required by an
applicable income tax treaty, is attributable to a United States
permanent establishment), then you will be subject to United
States federal income tax on that interest on a net income basis
(although you will be exempt from the 30% United States federal
withholding tax, provided you furnish us with a properly
executed IRS
Form W-8ECI
as discussed above under United States Federal Withholding
Tax) in the same manner as if you were a United States
person as defined under the Code. In addition, if you are a
foreign corporation, you may be subject to a branch profits tax
equal to 30% (or lower applicable income tax treaty rate) of
such interest, subject to certain adjustments.
Any gain realized on the disposition of a note generally will
not be subject to United States federal income tax unless:
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the gain is effectively connected with your conduct of a trade
or business in the United States (and, if required by an
applicable income tax treaty, is attributable to a United States
permanent establishment); or
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you are an individual who is present in the United States for
183 days or more in the taxable year of that disposition,
and certain other conditions are met.
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Information
Reporting and Backup Withholding
United
States Holders
In general, information reporting requirements will apply to
certain payments of principal, interest and premium paid on
notes and to the proceeds of the sale of a note (unless you are
an exempt recipient such as a corporation). Such payments may
also be subject to United States federal backup withholding at
the applicable rate if the recipient of such payment fails to
supply a taxpayer identification number, certified under
penalties of perjury, as well as certain other information or
otherwise fails to establish an exemption from backup
withholding. Any amounts withheld under the backup withholding
rules will be allowed as a refund or credit against that United
States Holders United States federal income tax liability
provided the required information is furnished to the Internal
Revenue Service.
Non-United
States Holders
A Non-United
States Holder may be required to comply with certain
certification procedures to establish that the holder is not a
U.S. person in order to avoid backup withholding with
respect to the payment of principal and interest on, or the
proceeds of the sale or other disposition of, a note. Any
amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against that
Non-United
States Holders United States federal income tax liability
provided the required information is furnished to the Internal
Revenue Service. In certain circumstances, the name and address
of the beneficial owner and the amount of interest paid on a
note, as well as the amount, if any, of tax withheld, may be
reported to the Internal Revenue Service. Copies of these
information returns may also be made available under the
provisions of a specific treaty or agreement to the tax
authorities of the country in which the
Non-United
States Holder resides.
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CERTAIN
ERISA CONSIDERATIONS
The following is a summary of certain considerations associated
with the purchase and holding of the notes by (a) employee
benefit plans that are subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended
(ERISA), (b) plans, individual retirement
accounts and other arrangements that are subject to
Section 4975 of the Internal Revenue Code (the
Code) or provisions under any federal, state, local,
non-U.S. or
other laws, rules or regulations that are similar to such
provisions of ERISA or the Code (collectively, Similar
Laws), and (c) entities whose underlying assets are
considered to include plan assets by reason of a plans
investment in such entities (each of (a), (b) and (c), a
Plan).
General
Fiduciary Matters
ERISA and the Code impose certain duties on persons who are
fiduciaries of a Plan subject to Title I of ERISA or
Section 4975 of the Code (an ERISA Plan) and
prohibit certain transactions involving the assets of an ERISA
Plan and its fiduciaries or other interested parties. Under
ERISA and the Code, any person who exercises any discretionary
authority or control over the administration of such an ERISA
Plan or the management or disposition of the assets of such an
ERISA Plan, or who renders investment advice for a fee or other
compensation to such an ERISA Plan, is generally considered to
be a fiduciary of the ERISA Plan.
In considering an investment in the notes with any portion of
the assets of a Plan, a fiduciary of the Plan should consider,
among other matters, whether the investment is in accordance
with the documents and instruments governing the Plan and the
applicable provisions of ERISA, the Code or any applicable
Similar Law relating to a fiduciarys duties to the Plan
including, without limitation, the prudence, diversification,
delegation of control and prohibited transaction provisions of
ERISA, the Code and any other applicable Similar Laws.
Prohibited
Transaction Issues
Section 406 of ERISA and Section 4975 of the Code
prohibit ERISA Plans from engaging in specified transactions
involving plan assets with persons or entities who
are parties in interest, within the meaning of
Section 406 of ERISA, or disqualified persons,
within the meaning of Section 4975 of the Code, unless an
exemption is available. A party in interest or disqualified
person, including a fiduciary of an ERISA Plan, who engages in a
non-exempt prohibited transaction may be subject to excise taxes
and other penalties and liabilities under ERISA and the Code.
Plans that are governmental plans (as defined in
Section 3(32) of ERISA), certain church plans (as defined
in Section 3(33) of ERISA or Section 4975(g)(3) of the
Code) and
non-U.S. plans
(as described in Section 4(b)(4) of ERISA) are not subject
to the requirements of ERISA or Section 4975 of the Code
but may be subject to similar prohibitions under other
applicable Similar Laws.
The acquisition
and/or
holding of the notes by an ERISA Plan with respect to which the
Company, a guarantor or any of the initial purchasers of the
outstanding notes, or certain of our or their affiliates, are
considered a party in interest or a disqualified person may
constitute or result in a direct or indirect prohibited
transaction under Section 406 of ERISA
and/or
Section 4975 of the Code, unless the investment is acquired
and is held in accordance with an applicable statutory, class or
individual prohibited transaction exemption. In this regard, the
U.S. Department of Labor has issued prohibited transaction
class exemptions (PTCEs) that may apply to provide
exemptive relief for direct or indirect prohibited transactions
resulting from the acquisition
and/or
holding of the notes. These class exemptions include, without
limitation,
PTCE 84-14
for transactions determined by independent qualified
professional asset managers,
PTCE 90-1
for transactions involving insurance company pooled separate
accounts,
PTCE 91-38
for transactions involving bank collective investment funds,
PTCE 95-60
for transactions involving life insurance company general
accounts and
PTCE 96-23
for transactions determined by in-house asset managers. In
addition, Section 408(b)(17) of ERISA and
Section 4975(d)(20) of the Code provide an exemption from
the prohibited transaction provisions of ERISA and
Section 4975 of the Code for the purchase and sale of
securities, provided that neither the issuer of the securities
nor any of its affiliates (directly or indirectly) have or
exercise any discretionary authority or control or render any
investment advice with respect to the assets of any ERISA Plan
involved in the transaction and provided further that the ERISA
Plan receives no less, and pays no more, than adequate
85
consideration in connection with the transaction. There can be
no assurance that all of the conditions of any such exemptions
will be satisfied.
Because of the foregoing, the notes should not be purchased or
held by any person investing plan assets of any
Plan, unless such purchase and holding will not constitute a
non-exempt prohibited transaction under ERISA or
Section 4975 of the Code or a similar violation of any
applicable Similar Laws.
Representation
Accordingly, by purchasing and holding notes, each purchaser and
subsequent transferee will be deemed to have represented and
warranted that either (i) it is not a Plan, and no portion
of the assets used by such purchaser or transferee to acquire
and hold the notes constitutes assets of any Plan or
(ii) neither the purchase nor the holding of the notes by
such purchaser or subsequent transferee will result in a
non-exempt prohibited transaction under Section 406 of
ERISA or Section 4975 of the Code or a similar violation
under any applicable Similar Laws.
The foregoing discussion is general in nature and is not
intended to be all inclusive. Due to the complexity of these
rules and the penalties that may be imposed upon persons
involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries, or other persons
considering whether to purchase the notes on behalf of, or with
the assets of, any Plan, consult with their counsel regarding
the potential applicability of ERISA, Section 4975 of the
Code and any Similar Laws to such transaction and whether an
exemption would be applicable to such transaction. Investors in
the notes have exclusive responsibility for ensuring that their
purchase of the notes does not violate the fiduciary or
prohibited transaction rules of ERISA or the Code or any similar
provisions of Similar Laws. The sale of any notes by or to any
Plan is in no respect a representation by us or any of our
affiliates or representatives that such an investment meets all
relevant legal requirements with respect to investments by such
Plans generally or any particular Plan, or that such an
investment is appropriate for such Plans generally or any
particular Plan.
86
PLAN OF
DISTRIBUTION
This prospectus is to be used by Oppenheimer & Co.
Inc. in connection with offers and sales of the Notes in
market-making transactions effected from time to time.
Oppenheimer & Co. Inc. may act as principal or agent
in such transactions. Such sales will be made at prevailing
market prices at the time of sale, at prices related thereto or
at negotiated prices. We will not receive any of the proceeds
from such sales.
Oppenheimer & Co. Inc. is controlled by, and is an
affiliate of, Oppenheimer Holdings Inc. Oppenheimer &
Co. Inc. acted as initial purchaser in the offering of the notes
on April 12, 2011 and received a customary initial
purchasers discount in connection therewith.
Oppenheimer & Co. Inc. or their affiliates have in the
past engaged, and may in the future engage, in commercial
banking, investment banking or other financial advisory
transactions with us and our affiliates in the ordinary course
of business, for which they received or will receive customary
fees and expenses.
Oppenheimer & Co. Inc. and its affiliates currently
own, and may from time to time trade, the notes for their own
account in connection with their principal activities. Such
sales may be made pursuant to this prospectus or otherwise
pursuant to an applicable exemption from registration.
Additionally, in the future Oppenheimer & Co. Inc. and
its affiliates may, from time to time, own notes as a result of
their market-making activities.
We have been advised by Oppenheimer & Co. Inc. that,
subject to applicable laws and regulations, it currently intends
to make a market in the notes. However, Oppenheimer &
Co. Inc. is not obligated to do so, and any such market-making
may be interrupted or discontinued at any time without notice.
In addition, such market-making activity will be subject to the
limits imposed by the Securities Act and the Exchange Act. We
cannot assure you that an active trading market will develop or
be sustained. We and Oppenheimer & Co. Inc., among
other parties, have entered into a registration rights agreement
with respect to the use by Oppenheimer & Co. Inc. of
this prospectus. Pursuant to such agreement, we agreed to
indemnify Oppenheimer & Co. Inc. against certain
liabilities, including liabilities under the Securities Act.
87
LEGAL
MATTERS
Skadden, Arps, Slate, Meagher & Flom LLP, New York,
New York is representing us in connection with the notes offered
pursuant to this prospectus.
EXPERTS
The financial statements and managements assessment of the
effectiveness of internal control over financial reporting
(which is included in Managements Report on Internal
Control over Financial Reporting) incorporated in this
Prospectus by reference to Oppenheimer Holdings Inc.s
Annual Report on
Form 10-K
dated March 6, 2012 have been so incorporated in reliance
on the report(s) of PricewaterhouseCoopers LLP, an independent
registered public accounting firm, given on the authority of
said firm as experts in auditing and accounting.
WHERE YOU
CAN FIND MORE INFORMATION
We and the Subsidiary Guarantors have filed with the SEC a
registration statement on
Form S-3
under the Securities Act with respect to the notes being offered
hereby. This prospectus, which forms a part of the registration
statement, does not contain all of the information set forth in
the registration statement. You will find additional information
about us and the Subsidiary Guarantors in the registration
statement. Statements contained in this prospectus as to the
contents of any contract or other document are not necessarily
complete, and you should read the documents that are filed as
exhibits to the registration statement or otherwise filed with
the SEC for a more complete understanding of the document or
matter. Each such statement is qualified in all respects by
reference to the document to which it refers.
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy any
reports, statements or other information that we file at the
SECs public reference room at 100 F Street, NE,
Room 1580, Washington, D.C. 20549. Please call the SEC
at
1-800-SEC-0330
for further information on the public reference room in
Washington, D.C. and in other locations. SEC filings are
also available to the public from commercial document retrieval
services and at the website maintained by the SEC at
http://www.sec.gov.
You may obtain any of the documents incorporated by reference
through us or the SEC or its website, as described above.
Documents incorporated by reference are available from us
without charge, excluding all exhibits unless specifically
incorporated by reference as an exhibit to this prospectus. You
may obtain documents incorporated by reference into this
prospectus by requesting them from us in writing or by telephone
at the following address and telephone number:
Oppenheimer
Holdings Inc.
125 Broad Street,
New York, New York 10004
(212) 668-8000
You will not be charged for any of these documents that you
request. If you request any incorporated documents from us, we
will mail them to you by first class mail, or another equally
prompt means.
88
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
We are incorporating by reference certain documents
that we have filed with the SEC under the Exchange Act, which
means that we can disclose important information to you by
referring you to another document filed separately with the SEC.
The information incorporated by reference is deemed to be part
of this prospectus, except for any information superseded by
information contained directly in this prospectus, or any
subsequently filed document deemed incorporated by reference.
This prospectus incorporates by reference the documents set
forth below that we have previously filed with the SEC (other
than information deemed furnished and not filed in accordance
with SEC rules, including Items 2.02 and 7.01 of
Form 8-K):
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Annual Report on
Form 10-K
for the year ended December 31, 2011 (filed with the SEC on
March 6, 2012), including portions of our definitive proxy
statement (filed with the SEC on March 28,
2011) incorporated by reference therein.
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Any future filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of the initial registration statement and prior
to the effectiveness of the registration statement and after the
date of this prospectus are incorporated herein by reference
until completion of the offering. Any statement contained in
this prospectus or in a document incorporated by reference shall
be deemed to be modified or superseded to the extent that a
statement contained in those documents modifies or supersedes
that statement. Any statement so modified or superseded will not
be deemed to constitute a part of this prospectus except as so
modified or superseded. Statements contained in this prospectus
as to the contents of any contract or other document referred to
in this prospectus do not purport to be complete, and, where
reference is made to the particular provisions of such contract
or other document, such provisions are qualified in all respects
by reference to all of the provisions of such contract or other
document. We will provide a copy of the documents we incorporate
by reference, at no cost, to any person that receives this
prospectus. To request a copy of any or all of these documents,
or the indenture or registration rights agreement, you should
write or telephone us at:
Oppenheimer
Holdings Inc.
125 Broad Street
New York, New York 10004
(212) 668-8000
Attention: Investor Relations
89
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
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Item 14.
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Other
Expenses of Issuance and Distribution
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The Registration Rights Agreement relating to the securities of
the Registrants being registered hereby provides that we will
bear all expenses in connection with the performance of our
obligations relating to market-making activities of
Oppenheimer & Co. Inc. in the notes. The estimated
expenses incurred or expected to be incurred in connection with
this registration statement and the transactions contemplated
hereby include printer expenses ($25,000), legal fees and
expenses ($75,000) and accounting fees and expenses ($100,000).
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Item 15.
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Indemnification
of Directors and Officers
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The following summaries are qualified in their entirety by
reference to the complete text of the statutes referred to below
and the certificates of incorporation, and bylaws Oppenheimer
Holdings Inc. and the Subsidiary Guarantors, each of which is
filed as an exhibit to this registration statement.
Section 145 (Section 145) of the General
Corporation Law of the state of Delaware (the DGCL)
empowers a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any action or suit
by reason of the fact that he or she is or was a director,
officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise. Depending on the
character of the proceeding, a corporation may indemnify against
expenses (including attorneys fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in
connection with such action, suit or proceeding if the person
indemnified acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or
her conduct was unlawful. In the case of an action by or in the
right of the corporation, no indemnification may be made in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless,
and only to the extent that, the Court of Chancery of the state
of Delaware (the Chancery Court) or the court in
which such action or suit was brought, shall determine that
despite the adjudication of liability, such person is fairly and
reasonably entitled to indemnity for the expenses that the
Chancery Court or such other court deems proper.
Section 145 further provides that to the extent a director
or officer of a corporation has been successful in the defense
of any action, suit or proceeding referred to above or in the
defense of any claim, issue or matter therein, he or she shall
be indemnified against expenses (including attorneys fees)
actually and reasonably incurred by him or her in connection
therewith. However, if the director or officer is not successful
in the defense of any action, suit or proceeding referred to
above or in the defense of any claim, issue or matter therein,
he or she shall only be indemnified by the corporation as
authorized in the specific case upon a determination that
indemnification is proper because he or she met the applicable
standard of conduct, as determined by a majority of the
disinterested board of directors, or otherwise as described in
Section 145.
Oppenheimer Holdings Inc. and the Subsidiary Guarantors
certificate of incorporation and bylaws, as amended, provide
indemnification to their officers and directors against
liabilities they may incur in their capacities as such, which
indemnification is similar to that provided by Section 145.
Section 102(b)(7) of the DGCL permits a corporation to
include in its certificate of incorporation a provision
eliminating or limiting the personal liability of a director to
the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a
director (i) for any breach of the directors duty of
loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL (relating to unlawful payment of
dividend and unlawful stock purchase and redemption) or
(iv) for any transaction from which the director derived an
improper personal benefit. Oppenheimer Holdings Inc. and the
Subsidiary Guarantors have provided in their certificate
II-1
of incorporation, as amended, that their directors shall be
exculpated from liability as provided under
Section 102(b)(7) of the DGCL and to the fullest extent
permitted by the DGCL.
Oppenheimer Holdings Inc. maintains, on behalf of its directors
and officers (including the directors and officers of the
Subsidiary Guarantor Registrants), insurance protection against
certain liabilities arising out of the discharge of their
duties, as well as insurance covering Oppenheimer Holdings Inc.
for indemnification payments made to its directors and officers
(including the directors and officers of the Subsidiary
Guarantor Registrants) for certain liabilities. The premiums for
such insurance are paid by Oppenheimer Holdings Inc.
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Item 16.
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Exhibits
and Financial Statement Schedules
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Exhibit
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Number
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Description of Exhibits
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3
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.1
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Certificate of Incorporation of Oppenheimer Holdings Inc., a
Delaware corporation (previously filed as an exhibit to
Form 10-Q
for the quarterly period ended June 30, 2009).
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3
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.2
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Certificate of Corporate Domestication of Oppenheimer Holdings
Inc., a Canadian corporation, as filed with the Secretary of
State of the State of Delaware on May 11, 2009 (previously
filed as an exhibit to
Form 10-Q
for the quarterly period ended June 30, 2009).
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3
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.3
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Certificate of Discontinuance of Oppenheimer Holdings Inc., a
Canadian corporation, as filed with Corporations Canada on
May 11, 2009 (previously filed as an exhibit to
Form 10-Q
for the quarterly period ended June 30, 2009).
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3
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.4
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Certificate of Continuance of Oppenheimer Holdings Inc. dated
May 11, 2005 (previously filed as an exhibit to
Form 10-Q
for the quarterly period ended June 30, 2005).
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3
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.5
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By-Laws of Oppenheimer Holdings Inc., a Delaware corporation
(previously filed as an exhibit to
Form 10-Q
for the quarterly period ended June 30, 2009).
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3
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.6
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Certificate of Incorporation of E.A. Viner International Co.
(previously filed as an exhibit to Form
S-4 dated
June 16, 2011).
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3
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.7
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Bylaws of E.A. Viner International Co. (previously filed as an
exhibit to Form
S-4 dated
June 16, 2011).
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3
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.8
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Certificate of Incorporation of Viner Finance Inc. (previously
filed as an exhibit to Form
S-4 dated
June 16, 2011).
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3
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.9
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Bylaws of Viner Finance Inc. (previously filed as an exhibit to
Form S-4
dated June 16, 2011).
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4
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.1
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Amended and Restated Promissory Note dated January 15,
2003, made by Viner Finance Inc. for the benefit of CIBC World
Markets Corp. (previously filed as an exhibit to
Form 8-K
dated January 17, 2003).
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4
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.2
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Warrant dated January 14, 2008
No. W-A1
(previously filed as an exhibit to
Form 10-K
for the year ended December 31, 2007).
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4
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.3
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Registration Rights Agreement dated as of January 14, 2008,
between Oppenheimer Holdings Inc. and Canadian Imperial Bank of
Commerce (previously filed as an exhibit to
Form 10-K
for the year ended December 31, 2007).
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4
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.4
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Indenture dated as of April 12, 2011 among Oppenheimer
Holdings Inc., the subsidiary guarantors, The Bank of New York
Mellon Trust Company, N.A., as Trustee and The Bank of New
York Mellon Trust Company, as Collateral Agent (including
the Form of 8.75% Senior Secured Note due 2018 as
Exhibit A) (previously filed as an exhibit to
Form 10-Q
for the quarter ended March 31, 2011).
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4
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.5
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Registration Rights Agreement dated April 12, 2011 by and
among Oppenheimer Holdings Inc., a Delaware corporation, E.A.
Viner International Co., a Delaware corporation, Viner Finance
Inc., a Delaware corporation and Morgan Stanley & Co.
Incorporated, as representative of the several Initial
Purchasers (previously filed as an exhibit to
Form 10-Q
for the quarter ended March 31, 2011).
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5
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.1*
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Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
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12
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.1**
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Computation of Ratio of Earnings to Fixed Charges.
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23
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.1**
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Consent of PricewaterhouseCoopers LLP.
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23
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.2*
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Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(contained in opinion filed as Exhibit 5.1).
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II-2
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Exhibit
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Number
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Description of Exhibits
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24
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.1*
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Power of Attorney (included on signature pages).
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25
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.1*
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Form T-1
Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939, as amended, with respect to
the Trustee (relating to trustee under indenture governing the
8.75% Senior Secured Notes due 2018).
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* |
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Previously filed. |
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** |
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Filed herewith. |
The undersigned registrants hereby undertake:
1. To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering
price set forth in the Calculation of Registration
Fee table in the effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (i),
(ii) and (iii) above do not apply if the information
required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to
the SEC by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in this registration statement, or
is contained in a form of prospectus filed pursuant to
Rule 424(b) that is part of this registration statement.
2. That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
4. That, for the purpose of determining liability under the
Securities Act of 1933 to any purchaser, each prospectus filed
pursuant to Rule 424(b) as part of a registration statement
relating to an offering, other than registration statements
relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A, shall be deemed to be part of and
included in the registration statement as of the date it is
first used after effectiveness. Provided, however,
that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify
any statement that was made in the registration statement or
prospectus that was part of the registration statement or made
in any such document immediately prior to such date of first use.
II-3
5. That, for the purpose of determining liability of the
registrant under the Securities Act of 1933 to any purchaser in
the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering
of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method
used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the
following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell
such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be
filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned registrant or used
or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus
relating to the offering containing material information about
the undersigned registrant or its securities provided by or on
behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the
offering made by the undersigned registrant to the purchaser.
6. That, for purposes of determining any liability under
the Securities Act of 1933, each filing of the registrants
annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plans
annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
7. Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-3
and has duly caused this Amendment No. 2 to the Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New
York, on March 16, 2012.
OPPENHEIMER HOLDINGS INC.
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By:
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/s/ Albert
G. Lowenthal
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Name: Albert G. Lowenthal
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Title:
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Chairman, Chief Executive Officer
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and Director
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by
the following persons in the capacities and on the date
indicated.
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Signatures
|
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Title
|
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Date
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/s/ Albert
G. Lowenthal
Albert
G. Lowenthal
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Chairman, Chief Executive Officer and Director (Principal
Executive Officer)
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March 16, 2012
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*
Elaine
K. Roberts
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President, Treasurer and Director
(Principal Financial Officer and Principal Accounting Officer)
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March 16, 2012
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*
R.
Crystal
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Director
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March 16, 2012
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*
W.
Ehrhardt
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|
Director
|
|
March 16, 2012
|
|
|
|
|
|
*
M.A.M.
Keehner
|
|
Director
|
|
March 16, 2012
|
|
|
|
|
|
*
K.W.
McArthur
|
|
Director
|
|
March 16, 2012
|
|
|
|
|
|
*
A.W.
Oughtred
|
|
Director
|
|
March 16, 2012
|
|
|
|
|
|
*
B.
Winberg
|
|
Director
|
|
March 16, 2012
|
|
|
By: |
/s/ Albert
G. Lowenthal
|
Albert G. Lowenthal
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-3
and has duly caused this Amendment No. 2 to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York,
State of New York, on March 16, 2012.
E.A. VINER INTERNATIONAL CO.
|
|
|
|
By:
|
/s/ Albert
G. Lowenthal
|
Name: Albert G. Lowenthal
|
|
|
|
Title:
|
Chairman, Chief Executive Officer
|
and Director
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by
the following persons in the capacities and on the date
indicated.
|
|
|
|
|
|
|
Signatures
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Albert
G. Lowenthal
Albert
G. Lowenthal
|
|
Chairman, Chief Executive Officer and Director (Principal
Executive Officer)
|
|
March 16, 2012
|
|
|
|
|
|
*
Jeffrey
J. Alfano
|
|
Senior Vice President and Chief Financial Officer (Principal
Financial Officer and Principal Accounting Officer)
|
|
March 16, 2012
|
|
|
|
|
|
*
Elaine
K. Roberts
|
|
Director
|
|
March 16, 2012
|
|
|
|
|
|
*
Dennis
P. McNamara
|
|
Director
|
|
March 16, 2012
|
|
|
By: |
/s/ Albert
G. Lowenthal
|
Albert G. Lowenthal
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-3
and has duly caused this Amendment No. 2 to the Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New
York, on March 16, 2012.
VINER FINANCE INC.
|
|
|
|
By:
|
/s/ Albert
G. Lowenthal
|
Name: Albert G. Lowenthal
|
|
|
|
Title:
|
Chairman, Chief Executive Officer
|
and Director
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by
the following persons in the capacities and on the date
indicated.
|
|
|
|
|
|
|
Signatures
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Albert
G. Lowenthal
Albert
G. Lowenthal
|
|
Chairman, Chief Executive Officer and Director (Principal
Executive Officer)
|
|
March 16, 2012
|
|
|
|
|
|
*
Jeffrey
J. Alfano
|
|
Senior Vice President and Chief Financial Officer (Principal
Financial Officer and Principal Accounting Officer)
|
|
March 16, 2012
|
|
|
|
|
|
*
Elaine
K. Roberts
|
|
Director
|
|
March 16, 2012
|
|
|
|
|
|
*
Dennis
P. McNamara
|
|
Director
|
|
March 16, 2012
|
|
|
By: |
/s/ Albert
G. Lowenthal
|
Albert G. Lowenthal
II-7
EXHIBIT INDEX
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibits
|
|
|
3
|
.1
|
|
Certificate of Incorporation of Oppenheimer Holdings Inc., a
Delaware corporation (previously filed as an exhibit to
Form 10-Q
for the quarterly period ended June 30, 2009).
|
|
3
|
.2
|
|
Certificate of Corporate Domestication of Oppenheimer Holdings
Inc., a Canadian corporation, as filed with the Secretary of
State of the State of Delaware on May 11, 2009 (previously
filed as an exhibit to
Form 10-Q
for the quarterly period ended June 30, 2009).
|
|
3
|
.3
|
|
Certificate of Discontinuance of Oppenheimer Holdings Inc., a
Canadian corporation, as filed with Corporations Canada on
May 11, 2009 (previously filed as an exhibit to
Form 10-Q
for the quarterly period ended June 30, 2009).
|
|
3
|
.4
|
|
Certificate of Continuance of Oppenheimer Holdings Inc. dated
May 11, 2005 (previously filed as an exhibit to
Form 10-Q
for the quarterly period ended June 30, 2005).
|
|
3
|
.5
|
|
By-Laws of Oppenheimer Holdings Inc., a Delaware corporation
(previously filed as an exhibit to
Form 10-Q
for the quarterly period ended June 30, 2009).
|
|
3
|
.6
|
|
Certificate of Incorporation of E.A. Viner International Co.
(previously filed as an exhibit to Form
S-4 dated
June 16, 2011).
|
|
3
|
.7
|
|
Bylaws of E.A. Viner International Co. (previously filed as an
exhibit to Form
S-4 dated
June 16, 2011).
|
|
3
|
.8
|
|
Certificate of Incorporation of Viner Finance Inc. (previously
filed as an exhibit to Form
S-4 dated
June 16, 2011).
|
|
3
|
.9
|
|
Bylaws of Viner Finance Inc. (previously filed as an exhibit to
Form S-4
dated June 16, 2011).
|
|
4
|
.1
|
|
Amended and Restated Promissory Note dated January 15,
2003, made by Viner Finance Inc. for the benefit of CIBC World
Markets Corp. (previously filed as an exhibit to
Form 8-K
dated January 17, 2003).
|
|
4
|
.2
|
|
Warrant dated January 14, 2008
No. W-A1
(previously filed as an exhibit to
Form 10-K
for the year ended December 31, 2007).
|
|
4
|
.3
|
|
Registration Rights Agreement dated as of January 14, 2008,
between Oppenheimer Holdings Inc. and Canadian Imperial Bank of
Commerce (previously filed as an exhibit to
Form 10-K
for the year ended December 31, 2007).
|
|
4
|
.4
|
|
Indenture dated as of April 12, 2011 among Oppenheimer
Holdings Inc., the subsidiary guarantors, The Bank of New York
Mellon Trust Company, N.A., as Trustee and The Bank of New
York Mellon Trust Company, as Collateral Agent (including
the Form of 8.75% Senior Secured Note due 2018 as
Exhibit A) (previously filed as an exhibit to
Form 10-Q
for the quarter ended March 31, 2011).
|
|
4
|
.5
|
|
Registration Rights Agreement dated April 12, 2011 by and
among Oppenheimer Holdings Inc., a Delaware corporation, E.A.
Viner International Co., a Delaware corporation, Viner Finance
Inc., a Delaware corporation and Morgan Stanley & Co.
Incorporated, as representative of the several Initial
Purchasers (previously filed as an exhibit to
Form 10-Q
for the quarter ended March 31, 2011).
|
|
5
|
.1*
|
|
Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
|
|
12
|
.1**
|
|
Computation of Ratio of Earnings to Fixed Charges.
|
|
23
|
.1**
|
|
Consent of PricewaterhouseCoopers LLP.
|
|
23
|
.2*
|
|
Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(contained in opinion filed as Exhibit 5.1).
|
|
24
|
.1*
|
|
Power of Attorney (included on signature pages).
|
|
25
|
.1*
|
|
Form T-1
Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939, as amended, with respect to
the Trustee (relating to trustee under indenture governing the
8.75% Senior Secured Notes due 2018).
|
|
|
|
* |
|
Previously filed |
|
** |
|
Filed herewith. |